Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Max Singer who wrote (7239)	6/27/1999 2:15:00 PM
From: HRM	Read Replies (1) \| Respond to of 20297

<<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.>> Interesting question. I think it is a combination of factors: (1) this is a scale business, (2) we are still in the high growth phase of the EBPP market, and (3) the combination wholesale/retail nature of the business. With this combination, CheckFree appears to have decided that keeping an attractive price (to both the end consumer and the wholesaler) and growing the number of units (and the market as a whole) helps to maximize the future revenue stream. Pete Kight alluded to this line of thinking in an article last fall in Banking Strategies. I also see this same line of thinking in items such as the free trial periods they have been discussing recently. And that is probably not an unreasonable bet if you think prices are going to decline in the future. In that type of environment the one thing you want to protect against is getting caught in the middle (i.e., between being a niche player and one of the scale players). It is a tough dilemma, how to manage a scale business in a rapidly growing market while controlling your expense structure so you don't get eaten alive. But remember, this is the same dilemma CheckFree's competitors are facing also (even if they are not a standalone company). Hope this helps. Harry