Reckon's race is run in the cloud accounting battle
Summary
"I dont think [the deal] was necessarily critical for MYOB, its more important for Reckon," Morningstar senior technology equities analyst & portfolio manager Gareth James told The Australian Financial Review .Reckon chief executive Clive Rabie and managing director Sam Allert have the unenviable task of convincing shareholders that the company is able to not just survive, but thrive, in an era of cloud accounting in which Xero and MYOB have a significant upper hand in the small and medium-sized business segment, and it lacks the cash and resources to implement an product development investment program the size of MYOBs in its accountant group.Credit Suisse equities analyst Lucas Goode said Reckons accountant group product, APS, was "a bit of a sunset business".Without this deal, which MYOB CEO Tim Reed admitted the ACCC had been likely to block in June anyway, the company has a much bigger task ahead to convince shareholders its $80 million investment in research and development and sales and marketing is worth the short-term hit to margins."The holy grail is the Facebook situation where you build a global platform, which has network effects and thats what Xero really wants to achieve and its an incredible end game which isnt even on the cards for MYOB," he said.