A2B - A2B Australia

[galumay]

The CAB result wasn't so bad. I think that the regulators sparing the radio network has worked to CAB's advantage in a big way. It's been pretty well worked over in the last few months. It's still too pricey for me to buy, but it's around fair value, or my judgement of it anyway.

I don't really know why they still persist with the bus thing. Surely that cash is better in the hands of shareholders.

I think the market has seriously over estimated the impact of things like Uber, the cash burn is astronomical at Uber, I know its funded by Google, but there must be some finite limit to the amount of money they are prepared to lose - and all the while CAB is continuing to make a healthy profit.

 

[ROE]

I think the market has seriously over estimated the impact of things like Uber, the cash burn is astronomical at Uber, I know its funded by Google, but there must be some finite limit to the amount of money they are prepared to lose - and all the while CAB is continuing to make a healthy profit.

I reckon it is an absolutely bargain, I am back into big time recently.

I price it for the worse it it still crazy cheap, I price in earning can decline to 30-35c and it should stabilise from
there and easily match inflation grow.

Seriously Uber is convenience but if they play the same rule as Cabbie they aren't cheap, they talking about Cabbie
has the protection but Uber is the one that has the unfair advantage doing dodgy stuff.

I am all for law passing ride sharing and legislate it and make it take on some of the cost of the Cabbie, CAB can stand up and fight there easily.

 

[ROE]

I don't really know why they still persist with the bus thing. Surely that cash is better in the hands of shareholders.

I agree, they need to spend money building a unified apps for all cabbie and make it easier to catch taxi
lot of people still catching taxi especially tourist and business so Uber may carve out a market but it wont take away all the cabbie lunch.

Also something you may know as I recently got into it, a while ago they bought MTData system
I cant find in annual report any where that they own it, what the heck happen to it?
this is a very decent stuff and there is huge value in this system.

http://www.mtdata.com.au/

"Cabcharge announces investment in MTData Dispatch System
Cabcharge will be investing in the region of $20m to purchase what we consider
the most sophisticated Taxi Dispatch system. This investment will be spread
over the financial years 2010/11/12"

CAB payment and dispatching system worth a lot more than what the current market value it, there is a rumour not long ago on AFR an American company approach CAB to buy out their payment system for $500m
CAB said no and it never made to the ASX announcement stage.

The sum of all part of CAB is easily worth more than CAB market cap, just like FXJ on its trouble day.

 

[So_Cynical]

I think the market has seriously over estimated the impact of things like Uber.

Seriously Uber is convenience but if they play the same rule as Cabbie they aren't cheap, they talking about Cabbie has the protection but Uber is the one that has the unfair advantage doing dodgy stuff.

Its called disruptive technology.

 

[sinner]

Its called disruptive technology.

I work in the technology startup field. I have a lot of experience in this stuff, yes tooting my own horn on that.

Uber is not disruptive technology. There is nothing disruptive about its technology!

Uber is nothing more than a regulatory arbitrage firm (which is exactly what ROE said). Just like Airbnb and the other idiot startups that idiots call "the sharing economy". They are also corporate scum of the worst order. I'd never invest, even if I had a time machine that showed me that all Uber investors become billionaires in 1 year time.

 

[skyQuake]

I work in the technology startup field. I have a lot of experience in this stuff, yes tooting my own horn on that.

Uber is not disruptive technology. There is nothing disruptive about its technology!

Uber is nothing more than a regulatory arbitrage firm (which is exactly what ROE said). Just like Airbnb and the other idiot startups that idiots call "the sharing economy". They are also corporate scum of the worst order. I'd never invest, even if I had a time machine that showed me that all Uber investors become billionaires in 1 year time.

Care to elaborate?

They've steamrolled any and all opposition encountered so far.

 

[So_Cynical]

Uber is not disruptive technology. There is nothing disruptive about its technology!

OK fair enough - Disruptive innovation then, Uber has and will continue to disrupt the old business model.

 

[McLovin]

C'mon guys

The threat to CAB is not from UberX it's from people being able to completely circumvent CAB's in taxi payment system. GoCatch/Uber/Ingogo/Lyft, they all allow users to pay for taxis without using an in-taxi payment service. It's unlikely the payment system will ever have a zero value, but you can't be so dimissive of the alternatives that currently offer something that CAB does not (which in itself shows just how poorly CAB have dealth with this competition). That's why I think not taking Fels' recommendation to remove compulsory membership of a radio network has done CAB a HUGE favour; it's given them a $100m/year revenue buffer.

Forget UberX, the real money is in how people pay for their taxi. AFAIK, goCatch is the most popular taxi app in Australia.

 

[sinner]

Care to elaborate?

They've steamrolled any and all opposition encountered so far.

I am not sure exactly how to elaborate on the "not" but speaking as someone who has lived and breathed technology, who is employed by exactly those kind of startups to deploy, maintain and operate the large scale distributed systems which make up their infrastructure: I can emphatically state that nothing they are doing in the technology space is disruptive or even remotely innovative.

On being corporate scum, you can read any of the accounts of people who were Uber drivers or pretty much any journalism on Uber at all. The bullcrud that Uber spouts about their drivers, how much they make, how their jobs are, etc doesn't even stand up to the vaguest of scrutiny. In fact, I would advise doing that, to really see what this "sharing economy" is all about (hint: it's just plain old regulatory arbitrage dressed up in Silicon Valley robes).

Looks like the drivers are starting to revolt though: http://www.wired.com/2015/08/uber-class-action-lawsuit/

In neither case does steamrolling opposition constitute evidence to the contrary. Consumers are flocking to the service now, specifically because the business model has been tuned to do exactly that. They are happy to get you trapped into the service (because where will you go after the competition is dead) before worrying about asking you to pay what it really costs (hint: the delta is almost entirely in regulatory compliance).This is exactly the kind of Silicon Valley business model that geeks like Richard Stallman have been railing against for 30+y and people are only just starting to wake up to now.

My 2c: here is what happens in society:

* Some dude drove around for money
* After a time he was making big bucks doing this so others joined in
* After a time, some people doing this cut corners to make more bucks
* After a time, cut corners caused issues and consumers demanded something be done
* After a time, the government passes regulations to stop the cut corners
* After a time, the government regulations increase and begin to become a barrier to market entry

Normally this is approximately where the story ends. But today we have a new thing:

* After a time, some people show up claiming to be disrupting the old regulated business model but actually they are just bypassing regulations and (in aggregate) charging for the privilege.

"Free market" proponents might say "but that's good! regulations r bad herr derr" but actually what was bad was just the onerous regulations which decrease healthy competition. The correct thing is to roll back a portion of the regulations, the most onerous portion which makes the least sense.

Not to burn the whole thing to the ground and hand over control to a bunch of idiots like Uber or Airbnb.

ROE said it already in much fewer words:

Seriously Uber is convenience but if they play the same rule as Cabbie they aren't cheap, they talking about Cabbie
has the protection but Uber is the one that has the unfair advantage doing dodgy stuff.

OK fair enough - Disruptive innovation then,

As we say on the internet: forgive my lulz.

Australians, next time you're on Uber, ask yourself (or the driver):
* Is this human making minimum wage?
* Is this human protected from working crazy hours?
* Is this human forced to act with my safety and interest in mind, as the consumer?
* Is my fare going back into the Australian economy to pay for Medicare and Education, or is it going to Silicon Valley to repay Venture Capitalists?
and so on...

 

[Klogg]

In neither case does steamrolling opposition constitute evidence to the contrary. Consumers are flocking to the service now, specifically because the business model has been tuned to do exactly that. They are happy to get you trapped into the service (because where will you go after the competition is dead) before worrying about asking you to pay what it really costs (hint: the delta is almost entirely in regulatory compliance).This is exactly the kind of Silicon Valley business model that geeks like Richard Stallman have been railing against for 30+y and people are only just starting to wake up to now.

I agree with the most part of your post - but I don't fully agree with the bold section in the quote above.

I believe that CAB pay a commission to the taxi 'group' (I don't know the official term) to keep them using the CAB POS terminals. Now that the 10% has been reduced to 5%, I'm almost certain it has been reduced, but there's still some fat to be cut there.

If you add to that the cost of taxi licenses (which did not reflect the cost of regulation) it again introduced extra fat into the system. If they cut this right back, then yes, it's purely regulatory arbitrage.

Of course, you did say 'almost', and you certainly know more than me on the issue, so I won't argue anymore

 

[sinner]

Of course, you did say 'almost', and you certainly know more than me on the issue, so I won't argue anymore

For full disclosure, I don't hold CAB and have not looked at their books very closely. I'm not an expert business analyst (especially compared to other posters in this thread) and I know nothing about the cab business specifically, except as a frequent customer when I'm working.

All I know is the inside of the technology industry, especially startup stuff over the last 3y. If the path we are on now is "sustainable" and the likes of Uber is the next Google or Amazon in 10y from now then lord help us.

Current Uber valuation: $50bn
Current Amazon valuation: $209bn (Amazon Web Services literally changed the entire game)
Current Netflix valuation: $39bn (and guess what Netflix is hella innovative and disruptive! their work with microservices and stuff like ChaosMonkey is true gold)
Current IBM valuation: $137bn
Current HPQ valuation: $46.5bn

 

[McLovin]

I agree with the most part of your post - but I don't fully agree with the bold section in the quote above.

I believe that CAB pay a commission to the taxi 'group' (I don't know the official term) to keep them using the CAB POS terminals. Now that the 10% has been reduced to 5%, I'm almost certain it has been reduced, but there's still some fat to be cut there.

If you add to that the cost of taxi licenses (which did not reflect the cost of regulation) it again introduced extra fat into the system. If they cut this right back, then yes, it's purely regulatory arbitrage.

Of course, you did say 'almost', and you certainly know more than me on the issue, so I won't argue anymore

Sinner is talking about UberX. Unless i'm mistaken.

 

[skc]

C'mon guys

The threat to CAB is not from UberX it's from people being able to completely circumvent CAB's in taxi payment system. GoCatch/Uber/Ingogo/Lyft, they all allow users to pay for taxis without using an in-taxi payment service. It's unlikely the payment system will ever have a zero value, but you can't be so dimissive of the alternatives that currently offer something that CAB does not (which in itself shows just how poorly CAB have dealth with this competition). That's why I think not taking Fels' recommendation to remove compulsory membership of a radio network has done CAB a HUGE favour; it's given them a $100m/year revenue buffer.

Forget UberX, the real money is in how people pay for their taxi. AFAIK, goCatch is the most popular taxi app in Australia.

I agree. I think CAB is a dying company and priced accordingly.

It's business is about facilitating payment and communication in a taxi. These can now be done with an app on a mobile phone, which every driver and passenger have.

The government should regulate the taxi industry... in terms of driver background checking, training, car safety standards etc. Licensing... I guess is still needed as a result of these, while licensing quota is really not required imo. But the government shouldn't have to regulate which payment system to use, or which communication system a taxi needs.

If we were to start from scratch a taxi system now, you really don't need any of those crap machines sitting in a cab these days.

CAB will probably still make money for some years... but it's been taking way too big a clip on services that have simple substitutes now.

 

[Klogg]

Current Uber valuation: $50bn
Current Amazon valuation: $209bn (Amazon Web Services literally changed the entire game)
Current Netflix valuation: $39bn (and guess what Netflix is hella innovative and disruptive! their work with microservices and stuff like ChaosMonkey is true gold)
Current IBM valuation: $137bn
Current HPQ valuation: $46.5bn

I agree with the companies you've called out here - but the only problem with this is that disruptive does not mean profitable, so company valuations probably isn't a valid comparison. In fact, as great as AWS is, it's not very profitable at all... (I predominantly use VMWare ESXi [and the related VMWare software] but I'm well aware of the concepts).

I'm going off on a tangent here, but I do wonder what Uber's competitive advantage is. What's stopping another company hooking up an app to Paypal (the ownership of Paypal aside) and doing the same thing? There's minimal switching costs (even for drivers), and a little marketing will make people feel comfortable with using a different provider. Just thinking out aloud...

CAB will probably still make money for some years... but it's been taking way too big a clip on services that have simple substitutes now.

Agreed. Which also makes me curious when companies like SmartPay are trying to beat CAB at this game... Why would you bother? (and Ivan Hammerschlag is no idiot)

 

[ROE]

Forget UberX, the real money is in how people pay for their taxi. AFAIK, goCatch is the most popular taxi app in Australia.

True but none of them has taxi companies and that is where it hard for these guys to break in, CAB owns a lot of taxi companies and they continue to use CAB payment system by default.

also it cost Taxi driver nothing having CAB terminal and it cost Taxi driver nothing processing it, what CAB throw on top has no effect on driver earnings, so the incentive for Cab drivers to have CAB terminal is a no brainer as you can see they growing in number each year any new taxi put out ...free CAB charge terminal, I think CAB do pay commission to large taxi companies using their payment system so the incentive for using CAB stuff is fairly straight forward, more will sign up not less

These terminal is not ancient dinosaur, they just look old but they are the state of the art stuff
and provide services just like the apps or better...

most taxi can not afford not to have CAB terminal as you can get to places where there is no data or your phone doesn't work.

eventually a market will carve out for each player, some will disappear, other survive and some get bigger and I think CAB will be one of the surviving one.

all the other players can play but out of all the player I think CAB has the upper hand because of its infrastructure.

Before the apps there are a few already trying to break into CAB market but it not easy due to its infrastructure control and all of them failed to make any impact .. time will tell if the apps onslaught has a different path.

 

[So_Cynical]

As we say on the internet: forgive my lulz.

Australians, next time you're on Uber, ask yourself (or the driver):
* Is this human making minimum wage?
* Is this human protected from working crazy hours?
* Is this human forced to act with my safety and interest in mind, as the consumer?
* Is my fare going back into the Australian economy to pay for Medicare and Education, or is it going to Silicon Valley to repay Venture Capitalists?
and so on...

OK im not saying its a good thing, just stating that the old business model is broken - disrupted, changed forever...and yeah its a race to the bottom.

Note that taxi driving was never a popular, sort after avenue of employment...its a **** job, always has been and will continue to be.

 

[PinguPingu]

Timely article?

http://www.theage.com.au/business/m...ess-ripped-away-from-you-20150906-gjgibi.html

 

[galumay]

Timely article?

http://www.theage.com.au/business/m...ess-ripped-away-from-you-20150906-gjgibi.html

I guess it depends whether you concur with the view of Uber as a disrupter, as pointed out in this thread its not really a disruptive technology or company.

Its a massive multi national flexing its weight in the marketplace, prepared to run up almost inconcievable losses for an outcome that is not actually all that clear and obvious.

Time will tell how all of that plays out. Of more interest to me is whether CAB can adapt to the challenges provided by the legislative changes that have impacted them and whether they can continue to develop and grow their payments systems - and there are signs that they can.

 

[McLovin]

ACCC has released draft ruling denying iHail authorisation to launch. The gist of the reasoning is that other players in this space are having to recruit taxis to their app but ihail would, because of who owns it, enter the market as the dominant app, not through competition.

It seems like the ACCC is taking the view that this new app is really just an extension of CAB's in-car payment system and will lead to the same competition outcomes.

 

[galumay]

ACCC has released draft ruling denying iHail authorisation to launch. The gist of the reasoning is that other players in this space are having to recruit taxis to their app but ihail would, because of who owns it, enter the market as the dominant app, not through competition.

It seems like the ACCC is taking the view that this new app is really just an extension of CAB's in-car payment system and will lead to the same competition outcomes.

Its an interesting restriction on technology by the ACCC, no wonder UBER are happy with the interim ruling!

Still the ACCC have already shown they have very little idea of technology and the impacts of decisions it makes - the NBN, POI decision being the most obvious.