Xero posts $69.5 million loss- was Kim Dotcom right after all?

Rod Dury, the principal of the Xero group is on John Key’s flag change panel. His biography said-

Rod Drury lives in the Hawke’s Bay region with his family, and claims he is of Ngai Tahu descent. A keen surfer, Drury received a number of other accolades during the year being named EY Entrepreneur of the Year as well as being voted one of the “50 Coolest Kiwis Ever” by the NZ Herald.

In 2014 Xero shares fell around 20%. Some people blamed this drop on Kim Dotcom very publicly expressing his views on the real worth of the company. Last Friday, Xero shares closed down a further 9.35 per cent at $20.85, as the firm reported a wider annual loss even as sales rose, after it increased investment in product development, sales and marketing.

The net loss expanded to $69.5 million in the year ended March 31, from $35.5 million the previous year. Revenue increased 78 per cent to $127.2 million, while operating expenses jumped 96 per cent to $167 million.

Xero said its US-based chief financial officer, Douglas Jeffries, was leaving to pursue other opportunities after only two months in the role and its previous CFO Ross Jenkins would assume the role until it found a replacement.

In September, Xero’s North American chief executive Peter Karpas left the business just six months after joining, which Drury said was because his skills were mismatched to the company’s needs at the time as it sought to build presence in the crucial US market.

The Australian Financial Review in September of last year remarked about Dotcom’s run in with Drury-

Dotcom hit back at Drury where it hurts, tweeting taunts about how Xero’s share price is over-valued, considering its user base.

Ouch. That accusation lies at the very heart of the serious concerns some well-regarded analysts and fund managers have about the loss-making Xero as an investment.

Kim Dotcom has long claimed Xero was over-valued and been rubbished by various sources (friends of John Key) for saying this. Its looking like he was right, but I don’t think there’ll be any rush to apologise from those who denigrated him for his predictions.

 



Categories: NZ Politics

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