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Technology Stocks : CheckFree (CKFR)
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To: TLindt who wrote (1516)2/6/1998 7:55:00 AM
From: jjs_ynot  Read Replies (1) of 8545
 
Dear TLindt,

I have been a lurker on this thread for several months.
This is my first response to SI. I am a CKFR shareholder.
I have both made and lost money on this stock over the
past several months. I have several concerns about the
business model that CKFR appears to have adopted. Perhaps
you could show me where my concerns are unfounded.

I have issues in three areas:

1) Consumer empowerment
2) Brand Identity
3) Profit / Revenue Growth

1) Consumer empowerment - By this I mean providing the
consumer with the means to use his checking account to make
point of sale purchases and bill payments. I have received a
number of ATM cards over the years without really wanting to
receive them. At this point I use these debit cards for about 50
percent of my transactions. Additionally like many folks, I have accepted paying hefty fees at ubiquitous ATM machines to get cash
as needed. Although I have the ability I have never paid a bill
with a wire transfer from my accounts ( since it is an awkward
transaction). I liken the wire transfer to the process that
one currently uses with Checkfree. Shouldn't CKFR be trying to
create and promote a type of "virtual" debit card and as you have suggested a virtual ATM network to empower the consumer? I am
afraid that valuable time is being wasted that may not be
recovered when someone else gets to this point. Once consumers
are "hooked" (like we all have been with ATM cards) we are
clients for life. It is consumer empowerment that I think
explains the rapid growth of online financial entities such as
stock brokerage, travel services, etc.

2)Brand Identity - If one establishes brand identity and a
franchise, a host of sins will be tolerated by the public. The
public has a short memory (ask any politician). Even a somewhat negative reputation due to poor service doesn't necessarily hurt
(e.g. e-trade, AOL). However, business customers have long
memory. When the inevitable glitches are encountered in
scaling-up operations, wouldn't it be better to have the
consumer as a primary customer. As a backend clearing
organization for banks; CKFR may feel there wrath if there
are problems. Many companies that provided networked money
handling for banks have been blacklisted for late deliveries
and are no longer in business (e.g. Anacomp).

3)Profit Growth - As a clearing type organization, it seems that
profitibility will be limited. Many of these back-office
operations are necessary evils with many companies such as stock clearing. Also, without brand identity this becomes a commodity service with limited profit and revenue growth.

My 2 cents FWIW. Your thoughts appreciated.
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