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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel? -- Ignore unavailable to you. Want to Upgrade?

To: HRM who wrote (7182)	6/26/1999 10:56:00 PM
From: Max Singer	Read Replies (1) \| Respond to of 20297

To all the experts on the fundamentals of CKFR, I have a question. 1. CKFR has revenue from sales in the eight figures. 2. We understand that it provides a service that is not now available from anyone else with comparable quality and reliability. 3. The main customers, banks, save much more money by using the CKFR service, than they pay for the service. 4. CKFR has very low earnings. The question is, why doesn't CKFR raise its prices by say 15% or 20%? Wouldn't doing so increase earnings on the order of $.50/share, which would make the stock more useful to CKFR and reduce its vulnerability to unwanted takeover. I don't understand how its volume could be price sensitive in that range. While eventually, when the industry is more mature, CKFR might have to charge lower prices to keep the business, why is that true today? Later on, when volume is higher, and all of CKFR's startup and expand expenses have been paid, it will be able to afford lowering prices. But now it needs to be making a real profit, and it has no competition of either price or quality. So why doesn't it raise its prices? Obviously this question has two implications. First, it could be a suggestion to management. Second, if the reason CKFR doesn't raise prices is that some of these assumptions are wrong, then CKFR may not be in as strong a position as we have been thinking. That is, if CKFR can raise prices now it is worth more than its high; but if there are reasons it can't raise prices now, those reasons may explain its current price -- or even a lower one. Does anyone have an analysis of CKFR's cost structure and demand curve that would answer this question? Thank you. Max