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Thread: Xro - xero

  1. #16
    Senior Member warthog's Avatar
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    quote:Originally posted by kura

    I liked the bit about customer receipts for the period ending 31 March 2007 "NIL"

    But to be fair it is acknowleged in the prospectus, that it is "high risk" and even a casual read will confirm this, but putting a value of $55 million (post issue) on a company with no income, seems out of touch with reality, didn't anyone tell these guys the dot com boom was over ?

    I'll be interested to see how much this company manages to get for the IPO, if it's fully subscribed, I'd be astonished.

    Disc: Will stick with MYOB myself.
    MYOB is like a slug. Watch Saas move with the times.

    Xero has nothing to do with the dot com bubble. There are high-risk propositions all over the market - why single out an internet-based business?

    Who said Xero wanted income before 300307? Maybe their current goal isn't income?
    warthog ... muddy and smelly

  2. #17
    Senior Member warthog's Avatar
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    quote:Originally posted by Anna Naum

    With Sam Morgan of Trade Me on the board this one will fly, at least to start with.
    The presence of SM isn't enough to make anything fly, per se. But check out Xero's website - there's a significant amount of other credibility there besides SM.
    warthog ... muddy and smelly

  3. #18
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    i like the part 'money raised to give to directors @ 4% interest so they can buy the shares'

    lol

    Oil - NZO
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  4. #19
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    Warthog,

    The problem I have with Saas is that the internet was supposed to make things cheaper. Saas seems to make them more expensive, despite promoters self-interested blather to the contrary.

    Sam Morgan got $700mil for Trade Me because, cost wise, its offerings were too compelling to ignore when compared to other offerings. Pay far less to get far more? Yeah, people will go for that over time.

    The $600 to $1200 Xero want from a small business for their system is not compelling and I have yet to hear of any "killer app" aspect to Xero.

    That said, they are not wrong to sense an opportunity. Scratch beneath the surface by talking to 100 MYOB customers in detail and you'll see what I mean.

    The opportunity for Xero definitely exists but having not yet seen anything of real substance (apart from the fact they're choosing to use our money and not theirs to chase the dream) I'll sit on the fence for a bit.

    ----
    Never try to teach a pig to sing. It wastes your time and annoys the pig.
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  5. #20
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    quote:Originally posted by Stranger_Danger

    Warthog,

    The problem I have with Saas is that the internet was supposed to make things cheaper. Saas seems to make them more expensive, despite promoters self-interested blather to the contrary.

    Sam Morgan got $700mil for Trade Me because, cost wise, its offerings were too compelling to ignore when compared to other offerings. Pay far less to get far more? Yeah, people will go for that over time.

    I recently sold a property through trade me, the listing cost $110 , If I sold it the traditional way, the agents fees would have been around $25,000...$30,000 Yes, I also paid for a valuation report and some signage, the eventual sale price was at the top end of the valuers price range, (sure, the process also took up about 60 hours of my personal time etc ) To me the potential savings were so compelling, that I thought I simply had to give it a go !

    Why would I want to transfer my bizz away from MYOB, to a SaaS service which has the potential to cost me a lot more in the long run ? Just can't see anything compelling at all myself. The cheapest XRO option is $50 per month, what does MYOB cost now (about $500 ? ) I purchaesd MYOB about 6 years ago, (got sick of doing everything on a spreadsheet) if I had been using the XRO service over the same 6 years that would have been a total cost of $3,600

  6. #21
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    quote:Originally posted by warthog


    Who said Xero wanted income before 300307? Maybe their current goal isn't income?
    Let me guess, the reason you get up and go to work in the morning, is beacuse it is for the overall benefit of humankind, and has absolutely nothing to do with that insignificant little detail called "income" ?


  7. #22
    Senior Member warthog's Avatar
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    quote:Originally posted by Dazza

    i like the part 'money raised to give to directors @ 4% interest so they can buy the shares'
    Actually this is relatively common practice around the world. Other ways to achieve the same thing, with less risk to directors, is to issue options.
    warthog ... muddy and smelly

  8. #23
    Senior Member warthog's Avatar
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    [quote]quote:Originally posted by kura

    Why would I want to transfer my bizz away from MYOB, to a SaaS service which has the potential to cost me a lot more in the long run ? Just can't see anything compelling at all myself. The cheapest XRO option is $50 per month, what does MYOB cost now (about $500 ? ) I purchaesd MYOB about 6 years ago, (got sick of doing everything on a spreadsheet) if I had been using the XRO service over the same 6 years that would have been a total cost of $3,600
    Current Xero pricing may or may not reflect eventual pricing.

    If things change, MYOB will charge you for an upgrade. It's part of the revenue model. Xero will make the change, and you keep going.

    At some price-point, Xero will make sense for busy people. We kiwis are world-famous for wanting to do everything ourselves and forgetting that if we stuck to our knitting, we would earn more. Same goes for tax avoidance.
    warthog ... muddy and smelly

  9. #24
    Senior Member warthog's Avatar
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    quote:Originally posted by kura

    quote:Originally posted by warthog


    Who said Xero wanted income before 300307? Maybe their current goal isn't income?
    Let me guess, the reason you get up and go to work in the morning, is beacuse it is for the overall benefit of humankind, and has absolutely nothing to do with that insignificant little detail called "income" ?
    No offence intended but there are times for everything. I reiterate - what is the point in having an online service if sudden popularity means that the servers are hammered so bad they fall over?
    warthog ... muddy and smelly

  10. #25
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    quote:Originally posted by warthog

    quote:Originally posted by Dazza

    i like the part 'money raised to give to directors @ 4% interest so they can buy the shares'
    Actually this is relatively common practice around the world. Other ways to achieve the same thing, with less risk to directors, is to issue options.
    Quite right, if the worst happened and went belly up, who would want a loan that could be attacked by liquidators ?

    Regards their pricing & bizz model, I would like to see them charge minimal (or zero) fees for the basic service, then make their money out of advertising/support/additional services. Owners of SME's would be a marketers delight, just think of that buying power logging on to your website every other day. Team up with an enterprising accountant, and you would have a one stop shop for SME compliance issues. (Someone might do it one day)

    Now a free service, that sure would put a strain on your servers !

  11. #26
    Senior Member warthog's Avatar
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    quote:Originally posted by kura

    quote:Originally posted by warthog

    quote:Originally posted by Dazza

    i like the part 'money raised to give to directors @ 4% interest so they can buy the shares'
    Actually this is relatively common practice around the world. Other ways to achieve the same thing, with less risk to directors, is to issue options.
    Quite right, if the worst happened and went belly up, who would want a loan that could be attacked by liquidators ?

    Regards their pricing & bizz model, I would like to see them charge minimal (or zero) fees for the basic service, then make their money out of advertising/support/additional services. Owners of SME's would be a marketers delight, just think of that buying power logging on to your website every other day. Team up with an enterprising accountant, and you would have a one stop shop for SME compliance issues. (Someone might do it one day)

    Now a free service, that sure would put a strain on your servers !
    Pricing: who wants to watch ads or be marketed widgets when trying to get your accounting done? The ads would drive a hog to drink.

    Free: if you pay for something, you can expect something in return. Try complaining (not that complaining about an accounting tool is very useful - you just want the damn thing to work) about something you got for free. Get you anywhere?

    Certainly, a cheaper option that would attract interest from those not wanting to go the whole hog (sorry) and then once their data is there it's easy to continue or upgrade as the case may be. However, the time for that may not be now. Remember, if you start with higher pricing, you always have the option of lowering your prices. You can guess what happens in a competitive market if you start your product off cheaply and raise pricing as you start to build marketshare ...
    warthog ... muddy and smelly

  12. #27
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    There is no reason I would think of to invest in this IPO over better risk/reward options out there. My prediction of share price: Stagnation (unless the boys selling the business prop it up)

  13. #28
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    Looking at the cash flow statement I see XERO receipts from customers! $55 million seems excessive for projected revenues of only $550,000. Even if projected earnings were $550,000 that would have given a P/E of 100! I will be more fun gambling my money at the TAB ($5.50 for SA to win the RWC!)

  14. #29
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    Well it is a start up from nothing so it will be all go to get it all going in NZ, then Aus and UK. Some risk, a lot of faith needed but potentially big gains.

    42 below led the way with IPO of a non operating company.

    There must be something different from Quicken, MYOB which have internet access parts but are not fully internet based.

    Might be how they get income - eg the trademe type thing where you pay bit by bit and have lots of advertising but no up front fee. Ie a free service. That could appeal to Kiwis.

  15. #30
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    quote:Originally posted by warthog

    No offence intended but there are times for everything. I reiterate - what is the point in having an online service if sudden popularity means that the servers are hammered so bad they fall over?
    No offence taken, but rather than getting into a discussion over needless details, the real point of my arguement was that at listing of IPO there will be 55 mill $1 shares on issue, of which the public will "roughly" own 15 mill, meaning the existing owners are rewarded with holding the remaining 40 mill, if the idea was that brilliant then fair enough, maybe their bizz model is worth $40 mill.

    Trouble is that I'm sure that a few of us could come up with an even better bizz model, just by sitting round a BBQ one afternoon, and throwing round a few ideas.

    Disc: Would love to have $40 million for every BBQ I've been to this year !

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