Motley Fool Australia

Packer makes another tech investment

taxi

It appears billionaire Mr James Packer has a current fondness for investments in the online space. Fresh from his recent investment in the US-listed property website  Zillow, as reported here, comes news that Mr Packer along with SEEK (ASX: SEK) co-founder Mr Paul Bassat has invested in up-and-coming disruptive taxi booking service goCatch.

Packer’s move is sure to have the founder of Cabcharge (ASX: CAB), Mr Reg Kermode, looking anxiously over his shoulder. As if it wasn’t bad enough for market leader Cabcharge that the Australian Competition and Consumer Commission (ACCC) was keeping close tabs on the super-profitable business, it now has to deal with start-up ventures that are vying for a slice of the profit pie.

According to a report published in the Australian Financial Review, goCatch “provides booking and payment services on smartphones and undermines the 10 per cent surcharge fee charges by Cabcharge.” News that goCatch plans to expand its domestic operations and also consider launching operations overseas comes at a time when internet giant Google has just invested over $250 million into US-based taxi app Uber. Uber already has some operations in Australia providing private-hire cars and is likely to also be looking to enter the profitable taxi booking and payment space too.

With a profit margin of 20% it is no wonder competitors are eyeing Cabcharge’s dominant position. The increased competition already appears to be having an effect of Cabcharge’s business. At its recent full-year profit release Cabcharge reported a 2.2% increase in revenue and a 0.9% fall in profits excluding associates profits which is a marked change from the double digit profit growth in the preceding year.

Foolish takeaway

Mr Packer was insightful enough to invest in online technologies and distance himself from old world media when he saw the structural shifts rolling in. It appears that structural headwinds are now beginning to blow towards Cabcharge, hopefully management will learn from the mistakes of other industries and act fast to adjust to a new world order.

Billionaires often get access to investment options that aren’t available to other investors but that doesn’t mean there aren’t some great opportunities out there for the rest of us! Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Tim McArthur owns a share in Cabcharge.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Related Articles…