How long ago did Fred IT release their cloud offering, three and a half years ago?
In Telstra's last annual report, the reason for writing down their investment in Fred by $21 million: "The impairment charges are a result of changing industry conditions and competitive pressures within the pharmaceutical and aged care industries... which lead to a decrement in the cash flow projections".
Given that even Fred wasn't immune to the change in industry conditions with having a cloud offering, I think that all of this money and focus Corum is throwing at cloud isn't even going to put a dent in their downward spiral. I'd be very surprised if they are even considering the cost cutting measures you are suggesting, that's something that's probably going to hit them in the face 2 or 3 years from now when Corum Clear is not the silver bullet they were hoping for and cash flows remain stagnant...
It's going to take a lot more than this for Corum to come out ahead and there's no guarantee that any value at all is going to be generated for shareholders. It's going to be great for the pharmacies and consumers though.
We have a fair idea of how Fred IT, Minfos, Simple Retail/MediSecure are fairing... do we know how RxOne, Z Software and Mountaintop Systems are going?
This niche is way too crowded, especially given the crumbs they are fighting for... and there appears to be no competitive advantage remaining if Chemist Warehouse keeps taking market share from other pharmacies and keeps growing their own solution.
COO Price at posting:
2.6¢ Sentiment: Hold Disclosure: Held
