Deutsche Bank Places a SELL rating on XERO with a target price of $14.63 USD / Xero's problems & why Xero's U.S. Sales Model Needs to change.

Eva Brocklehurst for FN Arena.com reports:  Deutsche Bank places a sell rating on XERO with a target price of NZ $18.50 or $14.63 USD  @ (1 NZD = 0.791 USD)

Click here to read how 1) Slow US Growth pressures XERO's valuation, 2) Medium term estimates have been reduced, 3) Acquisitions may fill the product gap,  and 4) how and why the XERO US Sales Model needs to change.   CLICK HERE

Xero's shares fall for third day / The company's shares opened down 6.7 per cent at $16.75 this morning as more than 50,000 shares were exchanged in the open minutes of trading.

Tom Pullar Strecker for Stuff.Co.nz writes: Xero shares have fallen sharply for the third consecutive day on the NZX.

The company's shares opened down 6.7 per cent at $16.75 this morning as more than 50,000 shares were exchanged in the open minutes of trading.

Chief executive Rod Drury said yesterday that the cloud accounting software firm was on track with its strategy and planned to hire at least another 500 staff over the coming year.

Xero currently employs more than 1000 staff, of whom more than 540 are based in New Zealand, spokeswoman Janna Wilkinson said.

By 10.05am, Xero shares had regained some of their losses and were trading down 4 per cent at $17.24.

Analyst doubts US success for Xero / "Xero is not likely to succeed in the United States" - Woodward Partners co-founder Nick Lewis

Radio New Zealand reports:  Accountancy software company Xero is not likely to succeed in the United States, and many predict slower growth there than previously forecast, an analyst says.

That follows Xero's sales report last week which showed customer numbers in the US rose just 4000 in the six months ended September to 22,000.

Woodward Partners co-founder Nick Lewis said Intuit was a large competitor with deep pockets, and Xero is a minnow by comparison.

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

Xero was disruptive three or four years ago but everybody else had caught up, he said.

Harbour Asset Management managing director Andrew Bascand said his company did not own any Xero shares but had spent considerable time researching the stock.

Mr Bascand said Xero has a good product so it was a question of price.

Xero's stock keeps tumbling / stock closed down 6.3 per cent at $17.95

Jamie Gray for the New Zealand Herald writes: Xero's stock keeps tumbling

.......Xero shares took another tumble yesterday, extending losses from Friday after analysts questioned the company's North American growth.

The online accounting software developer's stock closed down 6.3 per cent at $17.95 last night, below the $18.15 issue price of the company's $180 million capital raising it conducted a year ago with high-profile US investors including Peter Thiel-backed Valar Ventures.

Trading restrictions on the new shares issued in the capital raising end on Thursday and there has been market speculation that newly freed-up stock could be sold, which would drive the share price down further.

Xero shares, which hit a record high of $45.99 in March, valuing the company at almost $6 billion, fell through the key $20 support level on Friday after analysts expressed disappointment about the company's Thursday operating update, which showed only 4000 new US customers had been added, to reach a total of 22,000, in the six months to September 30.

Goldman Sachs downgraded its recommendation to a sell, while other analysts lowered their 12-month price targets on the stock.

A global dip in investor sentiment has also weighed on Xero shares.

Netsuite Debuts Premier Payroll Service

Nathan Eddy for eWeek.com writes: The revamped NetSuite user interface offers progressive disclosure, optimized user interfaces, and a flatter, more modern look.

Cloud-based enterprise resource planning (ERP) and financials software specialist Netsuite announced its next-generation payroll service, with features including a payroll interface that validates all leave, payroll and salary data, full gross-to-net calculations and support for check printing.

Other features include pay cards and direct deposit, enhanced payroll workflows that handle large transaction volumes, and employee self-service, expense tracking integrated into ERP.

The NetSuite Premier Payroll Service is aimed at large, multi-location enterprises within the U.S. employing thousands of employees and contingent workers.In addition, a revamped NetSuite user interface offers progressive disclosure, optimized user interfaces, and a flatter, more modern look.

The Premier Payroll Service, with built-in employee self-service and a fully integrated payroll interface, automatically enters time, salary, and payroll data. 

Other capabilities in Premier Payroll Service include, deeper editing capabilities, giving payroll managers the ability make adjustments to information at a line-item level without recalculating the entire payroll batch, and enhanced payroll workflows.

This means a payroll batch run can be suspended while in progress so revisions can be made with automatic resumption from the point of change.

New filtering and searching include capabilities to filter and search by employees and other criteria improve overall control and management of payroll batch creation and execution.

Increased flexibility in managing automated processes means managers will be able to adjust automated deductions and contributions within a payroll batch without creating separate data sets.

Finally, an enhanced user interface provides a more intuitive environment better designed to support larger data volumes and employee populations.

The above enhancements to the Premier Payroll Service are expected to be available in early 2015.

The service natively supports NetSuite cloud accounting, expense management, and commissions a full-service solution that automatically calculates earnings, deductions, contributions, taxes, paid time off, and more, with payments to personnel through direct deposit, printed checks, or purchasing cards.

In addition, Premier Payroll Service automates all payroll tax filings with U.S. federal, state, and local jurisdictions and streamlines creation and delivery of year-end Form W-2 and Form 1099-MISC.

At the ninth annual Internet Retailing Conference in London this week, the company will be demonstrating SuiteCommerce—a cloud-based omnichannel commerce platform that connects e-commerce and in-store point-of-sale (POS) to order management, inventory, merchandising, marketing, financials and customer service, and Venda—a cloud-based e-commerce platform with built-in responsive web design capabilities.

During the conference, James Cronin, NetSuite’s vice president of engineering, will deliver a presentation on online international expansion, which will cover the challenges and rewards of expanding into new markets.

The Internet Retailing Conference brings together retail executives and managers, industry experts and technology providers to share and explore how retailers can transform commerce amid a changing landscape of competition and evolving customer expectations for personalized and engaging brand experiences. 

Xero will hire 500 more staff / "Xero is the fastest growing - publicly-listed 'software as a service' (Saas) company in the world," CEO Rod Drury said.

Tom Pullar Strecker for Stuff.co.nz writes: Cloud accounting company Xero is likely to take on at least another 500 staff over the coming 12 months, chief executive Rod Drury says.

The forecast came as the company's shares dropped a further 7 per cent to a new annual low of $17.80 in morning trading on the NZX. Volumes were moderate with nearly 90,000 shares changing hands by 11am.

The drop put its shares 35 cents below the price at which Xero raised $180 million from United States and Kiwi investors in a landmark capital raising a year ago.

Drury would not comment on one analyst's suggestion that the company's losses might now be peaking, saying it had not issued any annual guidance.

Xero said on Thursday that it expected its loss for the six months to the end of September would come in at about $25m and Forsyth Barr analyst Blair Galpin is forecasting an annual loss of $50m.

A defiant Drury said Xero was "nailing its strategy" and US investors were still telling him to go for growth.

Xero's workforce has now topped 1000 and Drury said that while the rate of increase in its staff numbers would slow in percentage terms, he expected the Wellington-based firm would take on at least another 500 employees over the coming 12 months.

"We would love to hire as many of those as possible in New Zealand because there is a cost advantage, especially for development staff," he said.

"The thing no-one has picked up on is passing US$100m in annualised monthly revenue at an 85 per cent growth rate puts us at the very top end - if not the fastest growing - publicly-listed 'software as a service' (Saas) company in the world," Drury said.

"Xero is on a different trajectory to 'enterprise' Saas companies in the past, whose growth has tended to slow. We don't see any real barriers to growth in the future."

Xero's share price has come under pressure partly because Thursday's half-yearly trading update showed it had only won 4000 net new customers in the United States during the six months to September 30.

But Drury said it was disappointing people were focusing on that.

"We have been very clear the US will take a while, so we have executed our strategy of getting Australia and Britain into our growth engine," he said.

"We have done exactly what we said we were going to do.

"Because we are a global business, what I need to do is make sure we keep hitting that growth rate, which is why we are very focussed on Australia and Britain.

"Do we have to prove ourselves in the US? Yes, absolutely, which we will do over time."

Xero had released a big update to its cloud accounting software this morning adding a host of requested features, he said, and had a lot more big features coming by the end of the year.

"It feels like we are starting to sail away now in terms of functionality," he said.

"We are just machining this stuff out now."

When to Tax-Gain Harvest Your Bonds

Mike Piper, the Oblivious Investor writes: Last week’s article about tax-gain harvesting with bonds  (below) drew quite a bit of correspondence from readers. (To recap, the general idea is to sell a bond that has increased in value since you bought it — and which you have held for more than one year – and reinvest the proceeds in a similar, newly-issued bond with a comparable remaining maturity. In doing so, you effectively convert some of the interest income into long-term capital gain income, which is often advantageous due to the fact that long-term capital gains are taxed at a lower rate than ordinary income.)

The primary question readers had was: Are there cases in which it would not make sense to use such a strategy?

And the answer is that, yes, there certainly are some cases in which it wouldn’t make sense to tax-gain harvest your bonds.

For example, the desirability of the strategy depends on what type of bond we’re talking about.

• It is most likely to make sense with corporate bonds,
• It is less likely to make sense with Treasury bonds, because the interest on Treasury debt is free from state income taxes, whereas the capital gain income would, in most cases, be taxable at the federal and state levels, and
• It is almost never going to make sense with muni bonds, because muni bond interest is tax-exempt at the federal level, whereas the capital gain income would be taxable at the federal and state levels.

In addition, there’s the possibility that something else tax-related would make you want to avoid increasing your income this year. For example, if there’s a particular tax credit for which you currently just barely qualify, but the capital gain would push your income over the eligibility threshold, tax-gain harvesting this year is unlikely to be advantageous. Or, if you’re a retiree collecting Social Security, and your income level is currently at a point where your Social Security is nontaxable — but realizing a capital gain would push you into the range where a significant portion of your benefits would be taxable this year — that’s a point against tax-gain harvesting.

In general, the analysis that you want to do is figure out how big the tax increase would be this year (due to the capital gain income) and how big the savings would be in future years (due to the reduced level of interest income). To get the best analysis possible at a DIY level (i.e., without paying a professional to assess the situation for you), it probably makes sense to do a test-run through TurboTax (or something similar) comparing each approach (selling vs. holding) for the years in question.

Tax-Gain Harvesting with Bonds

Tax-loss harvesting is a very common tax strategy in which you sell a holding when its value is less than the amount you paid for it, then reinvest the proceeds from the sale in a similar (though not “substantially identical”) investment. The idea is that you then get to use the capital loss (up to $3,000 per year) to offset ordinary income on your tax return, without having to make any significant change to your portfolio.

Tax-gain harvesting is a somewhat less common strategy, as it’s generally only helpful for people in the 15% tax bracket or below. The idea is to sell a long-term holding for a gain, then reinvest the proceeds in a similar investment. The benefit comes from the fact that, if you’re in the 15% tax bracket or below, you do not have to pay any tax on the long-term capital gain, and now your cost basis in the asset has increased to the asset’s current value, thereby reducing the size of the capital gain that you might have to pay tax on in the future.

There is, however, a form of tax-gain harvesting that can be helpful even to investors who are in a tax bracket higher than 15%. It becomes relevant when you’ve held a bond for more than one year, and it is currently valued at a price higher than what you paid for it (i.e., the price has gone up because interest rates have fallen since you purchased the bond).

The idea is that, rather than holding the bond and continuing to receive payments at the bond’s higher-than-market interest rate, you sell your bond at a premium, then reinvest the proceeds in a bond that:

• Has a similar credit quality and remaining maturity (so that you’re not changing the risk of your portfolio), yet
• Is selling at (or very close to) its par value (e.g., because it’s a new bond).

By doing so, you essentially convert a portion of the yield that you would have received as interest into a long-term capital gain, which will be taxed at a lower rate than the interest income would have been. While it does result in having to pay the tax sooner than you otherwise would have had to (which is generally not a good thing), taking advantage of the difference in tax rates often allows you to achieve a higher after-tax return.

Visit The Oblivious Investor by Clicking Here.

Intuit eReceipts: Get your personal and/or business receipts into the right place (click to view)

From Intuit Labs we read: While watching a demo for yet another receipt scanning app, Ashley and Michele realized all those apps focus on paper receipts. Since they work on GoPayment and QuickBooks mobile they were very aware that that mobile and web based apps send electronic receipts but most of those receipts wind up in email inboxes. Their hope is to help everyone stay organized and/or quickly get reimbursed for any expense based receipts. It’s a web application that is designed to get your personal and/or business receipts into the right place. This is currently in beta testing with Intuit employees and not available to the public.

Xero shares fall below 2013 issue price / Shares of Xero fell as low as $17.75, and recently traded at $18.05

The Business Desk for the New Zealand Herald writes:  Shares of Xero have fallen below $18.15, the price that the cloud-based accounting software firm last year sold its stock at as part of a $180 million capital raising, as those investors come off share trading restrictions.

On October 16 last year, the Wellington-based company issued 9.92 million shares at $18.15 apiece, to Matrix Capital Management, Peter Thiel-backed Valar Ventures and other US investors, as part of a capital raising to fund its growth plans in the US market. The escrow period which prevents investors in the capital raising from selling their shares, ends this week.

Shares of Xero fell as low as $17.75, and recently traded at $18.05, giving the company a market capitalisation of $2.3 billion, below the $5.9 billion it recorded in March when the stock soared to $45.99. The stock has fallen some 57 per cent from its March highs, as a shift in global sentiment has seen investors re-evaluate valuations of tech-based, momentum stocks, like Xero.

"The market isn't dumb and knows the new amount of stock is essentially freed up for sale," said James Smalley, director at Hamilton Hindin Greene. "Particularly if it is a low liquidity stock, that can't help but have an effect on the short-term shareprice. Obviously the long-term share price is driven by the performance of the business, but in the short-term sentiment and simple demand and supply is what moves share prices."

Xero wants a million customers, and is targeting growth in the US market where it sees the potential to take market share of an estimate 29 million small to medium sized business owners. Last week, Xero said that just 22,000 of its total 371,000 customers are based in the US. It said the transition to cloud-based services "will play out over several years", with most American accounting firms focusing on compliance and are "only at the beginning of the transition to the cloud and proactive advisory services."

"No one is really questioning their dominance of the Australasian market, and to a certain degree the UK," Smalley said. "The size of the multiple they were trading on and the market capitalisation they had was implying almost a seamless way to move from New Zealand to Australia and to the UK, that they were going to get that sort of take up in the States at the same speed."

Further weighing on the stock, Smalley said, was a shift in offshore sentiment, as investors fret over a possible stall in global economic growth, particularly in Europe where weaker German data is causing concern the continent may slip back into recession. Growing geo-political tensions in Ukraine, Syria, Iraq and Hong Kong as well as the threat of Ebola has added to uncertainty in the market. The NZX 50 Index fell 1 per cent in morning trade to 5173.413, to its lowest since late August.

Salesforce launches Wave analytics cloud, boosts enterprise reach

Wave, the Salesforce Analytics Cloud is aimed at a broader base of business users and could expand the company's total addressable market. Salesforce is betting that it can turn analytics into fun.

Larry Dignan for ZD Net writes: Salesforce on Tuesday will launch Wave, its analytics cloud, in a move that broadens its platform for other business use cases and applications designed to make data fun and intuitive for the masses.

Wave, the Salesforce Analytics Cloud, is aimed at the broader subset of business users beyond sales and marketing professionals. Salesforce's analytics efforts are designed to be mobile first with the ability to pluck data from any source.

The rollout will be outlined out at Dreamforce 2014 by CEO Marc Benioff on Tuesday. Strategically, the two-year engineering effort to create Wave is driven by Salesforce's desire to become an enterprise player that spans most functions. For instance, Wave could be an analytics front-end to human resources, supply chain and manufacturing data. Analytics will give Salesforce the ability to boost its customer wallet share, but the real win may be increasing the company's total addressable market. [snip].  The article continues @ ZD Net, click here to continue reading....