Will,
I applaud your looking for the downside here. Though I own a fair amount of CheckFree (though not by comparison with some), and am bullish on the company, it's always good to try and understand the downside. In these kind of environments, it's easy to fall prey to groupthink, and end up just being blind cheerleaders for the company. (I've seen some other threads where this got very bad indeed).
Incidentally, even this intelligent, well-informed thread showed I think some signs of this phenomenon showed up in our collective reaction to the BARS downgrade.
So what are the risks or downsides ? Here are a few that occur to me, although I personally don't consider any of them major threats. It would be interesting to discuss further on this thread though, as I think most of us share similar views on what the upside is.
1. MSFDC. A powerful competitor in the bill-pay area, with both the
MS brand and clout, and access to the FDR credit card acquisition
business relationships. You could even think of some kind of
leverage of the Microsoft desktop, but I have a hard time seeing
this happen for real given all the other constraints.
2. Credit card players. The embryonic e-billing business so far is
based on billers with big, monthly billing runs. E-commerce may
over time generate larger transaction volumes based on (virtual)
point of sale payments, rather than deferred bills, at least for
consumers. This could allow other companies to become powerful
in this space (card-oriented players being the obvious ones,
though other, new payment methods could evolve and become big).
Those businesses could even then conceivably use that base to
attack some of CheckFree core business.
3. Banks. Banks could come to fear some forms of disintermediation
from CheckFree and see them as a competitor in some areas as they
become more powerful. They could then seek to build or establish
competition to CheckFree, or otherwise limit their profitability.
(This has happened to some extent in the credit card business, in
that some banks may regret how much they gave up to the FDRs of
this world. They haven't managed to do a lot about it though).
Can't think of too many more for now, but would welcome any more 'bear scenarios' for the company.
Regards, Roger. |
