Liddell gets Xero helm ahead of float

TOM PULLAR-STRECKER
Last updated 05:00 13/02/2014

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Xero has taken a step towards floating in the United States by appointing high-flying Kiwi ex-pat Chris Liddell as its chairman, analysts believe.

Liddell, who yesterday replaced former Kiwibank boss Sam Knowles as Xero's chairman, has arguably climbed further up the international corporate ladder than any other New Zealand businessman.

He served as chief financial officer of Microsoft and then General Motors since stepping down as chief executive of Carter Holt Harvey in 2002. He oversaw GM's US$23 billion float in 2010 and at one time he was tipped as the firm's likely chief executive.

Bill Veghte, general manager of Hewlett-Packard's Enterprise Group, has joined Xero's board as an independent director. Peter Karpas, a former vice president of Paypal who was responsible for its business with small and medium-sized firms in North America, has been appointed chief executive of Xero's North American business, completing the triumvirate of big-hitting appointments.

First NZ Capital analyst James Schofield noted that Wellington-based Xero had already publicly indicated it could list in the United States. "Clearly these appointments and the US orientation could be a natural precursor to such an event," he said.

Woodward Partners analyst Nick Lewis went further, saying in his view the appointments were "clearly preparation for a listing".

Liddell had close ties to the US investment community and the chances of Xero listing on the US' Nasdaq exchange had "gone up dramatically", he said.

Xero founder and chief executive Rod Drury said in a statement that Liddell had been a long-time supporter of Xero since it listed on the NZX in 2007.

"His experience at the top levels of the global technology industry and US capital markets position us strongly as an emerging global company. As you would expect from a fast expanding software company, our strategy is to increase US representation on our board," he said.

The three appointments were an excellent move that "changed the game" for Xero, Lewis said.

Karpas has also served as a senior vice president of Intuit, the company that dominates the accounting software market in the United States and whose lunch Xero now hopes to steal.

Lewis nevertheless said Xero's shares, which fell 10 cents to $39.90 yesterday, were expensive in Woodward's view, given the challenge Intuit posed in the US.

"Our biggest concern remains how Intuit is going to react to Xero gearing up in the US. We know David can beat Goliath - he did in the Bible - but more often than not Goliath beats David. "Given the stock is at $40 and the high degree of uncertainty in the US market, I would be playing it cautiously."

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Tim Reed, chief executive of Australian-based rival MYOB, said the buzz around Xero would not change its strategy. The trans-Tasman firm claims 1.2 million customers, versus Xero's total of a little over 200,000.

Reed, in Wellington yesterday, said the company would launch an iPhone and Android app and card reader in New Zealand by June that would let businesses accept credit card payments through a smartphone. MYOB's focus would remain solely on Australia and New Zealand, Reed said.

- BusinessDay

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