9.9m Xero shares going on market / ''burning through cash'', given its 1000-plus employees and marketing costs, and could possibly have to go back to the market for more cash ''some time in the next couple of years''.

Simon Hartley for Otago Daily Times writes: Xero has another problem to contend with when 9.9 million shares bought mainly in the US for $147 million a year ago come off escrow and can be traded from tomorrow.

While analysts are becoming perturbed by Xero's performance, the 9.9 million shares represent less than 1% of its present market capitalisation.

A year ago, Xero sold the 9.9 million shares at $18.15 in October and raised $147 million; part of a wider $180 million capital-raising, on the proviso the 9.9 million shares were held in escrow and would not be traded for a year.

Last year's sharemarket darling - its shares hit $45.99 in March - has gone off the boil, most lately after analysts criticised its sales momentum in the crucial US market, prompting various downgrades to forecasts of either target share prices or future profits after tax.

From a peak market capitalisation of $5.8 billion, Xero shares were $17.40 yesterday, valuing the company at $2.2 billion.

Following the Xero trading update last Thursday, its shares dipped below $20; they were down again almost 6% on Monday to $18, before hitting yesterday's $17.40.

Craigs Investment Partners broker Peter McIntyre said Xero shares dropped 20% during the past five trading days and had lost 44% over the past six months.

He said any selling of the 9.9 million shares could potentially see some further short-term share price weakness, but he believed US investors would take a more pragmatic, positive long-term view and hold their shares.

''In terms of significance, they [9.9 million shares represent] less than 1% of market capitalisation,'' he said.

While Xero maintained about $170 million in cash, Mr McIntyre said it was nevertheless ''burning through cash'', given its 1000-plus employees and marketing costs, and could possibly have to go back to the market for more cash ''some time in the next couple of years''.

Xero had so far exhibited ''good growth'', but given it was yet to post an after-tax profit, it needed to deliver on plans for its growth strategy, he said. He noted the rising analysts' scrutiny on Xero's implementing its growth strategy in the US market.

Xero came in for further criticism yesterday, from Woodward Partners co-founder Nick Lewis, who said while Xero's entry into the US ''was disruptive three or four years ago'', since then, the competition had caught up, Radio New Zealand reported.

He highlighted that Xero's US competition, Intuit, was a much larger competitor with deep pockets, while Xero was a minnow by comparison. Xero's $170 million cash in hand, to put towards marketing, was a small resource by US standards.

Mr Lewis said it would take something ''incredibly disruptive'' for Xero to beat Intuit at its own game.