Groupon Loses COO, Drastically Cuts Reported Revenue

Ethics? by Nom+du+Keyboard · 2011-09-26 05:51 · Score: 1

Could he find the business model and/or ethics of Groupon questionable?

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"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."

Re:Ethics? by raehl · 2011-09-26 05:55 · Score: 1

She.
And apparently she just didn't get along with the other top-level execs.

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paintball
Re:Ethics? by JordanL · 2011-09-26 06:03 · Score: 2

Chief Operating/Operations Officer

Essentially, this position usually is the lead logistics position.

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FanFictionRecs.net
Re:Ethics? by marcosdumay · 2011-09-26 06:52 · Score: 1

So in other words, she did fing the methods or the ethics questionable.

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Rethinking email
Re:Ethics? by ilikejam · 2011-09-26 07:04 · Score: 4, Funny

<scottish_accent>
10 coos in a field. Which one's closest to Iraq?
Coo 8.
10 coos in a field. Which one's on holiday?
The one with the wee calf.
</scottish_accent>

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C-x C-s C-x k
Re:Ethics? by Quirkz · 2011-09-26 07:22 · Score: 1

They call them fingers, but I never see them fing. Oh, wait, there they go ...

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The Quirkz Handbook of Self-Improvement for People Who Are Already Pretty Okay
Re:Ethics? by Sparckus · 2011-09-26 08:48 · Score: 1

lol

So in other words... by madprof · 2011-09-26 05:52 · Score: 4, Funny

Groupon is going to find itself in serious trouble soon due to an unsustainable business model and will be folding within the next 12-18 months?

Re:So in other words... by elrous0 · 2011-09-26 06:17 · Score: 4, Funny

Nonsense! They used to say the same crap about Pets.com back in the day.

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SJW: Someone who has run out of real oppression, and has to fake it.
Re:So in other words... by inviolet · 2011-09-26 06:17 · Score: 4, Insightful

Groupon is going to find itself in serious trouble soon due to an unsustainable business model and will be folding within the next 12-18 months?
Indeed. Groupon is in the same position that its retailer-customers are in: hooked on a ponzi-esque cycle of always needing another round of groupon signups. Businesses issue a groupon when they need the cash up front, and then later they get hit with the lossy customers, and need to do another groupon. Groupon itself seems to be in a similar situation.
In fairnes to Groupon, it seems like financial markets haven't yet worked out the right way to do valuations of companies like Groupon. Groupon is trying to explain that they have great potential that isn't quantifiable using GAAP. Everybody is mocking them for it, but how are they supposed to look good according to rules that were drawn up for brick-and-mortar, inventory-and-shelving companies?
Actually the same problem is writ even larger on the whole financial world. Because there is no GAAP way to express the value of customer loyalty, employee loyalty, brand loyalty, and so forth, MBAs come in and squander those precious things in order to increase items that GAAP does know how to express. "Look, realized earnings are up 12% this quarter because we moved production to China and in two years our customers will all leave when they realize we make junk now, where's my bonus?"

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FATMOUSE + YOU = FATMOUSE
Re:So in other words... by MightyMartian · 2011-09-26 06:34 · Score: 1

In trouble soon? If they were the Titanic, I'd say the bow is already high in the air, and we're just waiting for the whole to come apart midships.
Someone could help here with a good car analogy.

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The world's burning. Moped Jesus spotted on I50. Details at 11.
Re:So in other words... by madprof · 2011-09-26 06:35 · Score: 1

You are saying the business model of pets.com and Groupon are the same?
Re:So in other words... by epine · 2011-09-26 07:04 · Score: 2

Because there is no GAAP way to express the value of customer loyalty,
Dude, I wish you the best of luck. Loyalty is the hot ass you crave after wedding the invisible hand.
Corporations bent on cultivating the next quarterly earnings report don't hold much enduring appeal to informed consumers wishing to build relationship equity with non-human entities. Where does the loyalty come to rest in this system? With suckers, if you can find them?
The body beautiful

A reputation for morality and high ethical standards is normally built up over the course of a lifetime. But some big companies have found a quicker route--just buy it.
Are you planning to GAAP codify loyalty the commodity, or loyalty the sentiment? Watch your step, Groupon, there's a small crevice near you.
Re:So in other words... by BBTaeKwonDo · 2011-09-26 07:24 · Score: 1

Well, the Titanic sunk bow-first, so I think you meant "stern is already high in the air." For a car analogy, how about, "the wheels are coming off"? Or, to coin a phrase, "the auditors found the nitrous bottle and demanded it be taken out".
Re:So in other words... by Rude+Turnip · 2011-09-26 07:30 · Score: 1

There are somewhat established ways to estimate the value of such intangibles under GAAP or IFRS. The issue here is that Groupon seems to be a volatile startup and the inputs for determining these values are fscked.

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Bill Clinton: Pimp we can believe in. - The Shirt!!!
Re:So in other words... by Incensed · 2011-09-26 07:30 · Score: 1

Because there is no GAAP way to express the value of customer loyalty, employee loyalty, brand loyalty, and so forth,
Isn't this usually called "goodwill" in GAAP terms?
Re:So in other words... by boxless · 2011-09-26 08:03 · Score: 1

Not really, anymore. I think that's the old school definition.
Now it's more an indicator on a company's balance sheet of how much it has overpaid for something, or overvalued something. For example, if they have paid huge dot-com money for some new start up, but the financials of that start up are nowhere near the value the company paid for it, the difference must be put on the acquiring company's balance sheet as goodwill. Because balance sheets always have to net out to 0, when you pay more for something than it's worth, they have to put something in there to balance it out. Goodwill.
So, I've always looked at it as a negative.
Re:So in other words... by AliasMarlowe · 2011-09-26 08:05 · Score: 1

You are saying the business model of pets.com and Groupon are the same?
Other than the fact that pets.com eventually had the honesty to admit it was utterly and completely bust, even after trying sock puppets to delay the inevitable, yes.

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Those who can make you believe absurdities can make you commit atrocities. - Voltaire
Re:So in other words... by ColdWetDog · 2011-09-26 08:25 · Score: 1

I detect a breeze around here. I wonder why?

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Faster! Faster! Faster would be better!
Re:So in other words... by madprof · 2011-09-26 08:30 · Score: 1

Fair point.
Re:So in other words... by madprof · 2011-09-26 08:31 · Score: 1

You need to close the window. :)
Re:So in other words... by CraftyJack · 2011-09-26 08:45 · Score: 1

On a five year horizon, yes.
Re:So in other words... by Kalriath · 2011-09-26 09:43 · Score: 1

After the Groupon is USED, not sold. The coupon will always be presented prior to being paid out. And if accounts over the web are to be believed, sometimes Groupon does not pay out at all (i.e. they charge a 100% commission on some Groupons).

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For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
Re:So in other words... by farble1670 · 2011-09-26 11:16 · Score: 1

if they aren't valuable in a traditional sense, then how? seems to me,
1. it's becoming generally known that businesses rarely make $ from their service.
2. there is no brand loyalty to groupon.
3. they can be easily duplicated / copied.
and finally,
4. unreliable profit stream. the businesses that seek their service do so because they need a quick cash influx. unfortunately, those are the same type of businesses that are likely to default on their debts. they are essentially in the business of making high-risk loans.
Re:So in other words... by sdguero · 2011-09-26 11:34 · Score: 1

Nah. The government is gonna give them a $500 million 0% interest loan first. They won't fold until all the money has been transferred to a few execs offshore accounts. And that will take at least 2 years... ;)
Re:So in other words... by tehcyder · 2011-09-26 21:03 · Score: 1

In fairnes to Groupon, it seems like financial markets haven't yet worked out the right way to do valuations of companies like Groupon. Groupon is trying to explain that they have great potential that isn't quantifiable using GAAP. Everybody is mocking them for it, but how are they supposed to look good according to rules that were drawn up for brick-and-mortar, inventory-and-shelving companies?
The only relevant GAAP issue would be if Groupon tried to introduce their "potential" and "customer loyalty" into their acccounts as non-purchased goodwill.

Meanwhile, in the real world, you value companies on their future profits, and if Groupon can't deliver these, they will fail.

When Facebook produce their annual accounts, they don't get to add in £100bn (or whatever the current valuation is) of future goodwill as profit. Investors/the stock market may value their shares as they like, that doesn't mean you get to introduce ridiculously inflated expectations into your accounts as actual profit.

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To have a right to do a thing is not at all the same as to be right in doing it
Re:So in other words... by MechaStreisand · 2011-09-26 21:04 · Score: 1

How is that not fraud? If they lost money on a purchase, why can't they just put it down as a loss? Why zero, even when that's a damned lie?

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Disclaimer: IANAL. This post is, however, legal advice, and creates an attorney-client relationship.
Re:So in other words... by tehcyder · 2011-09-26 21:59 · Score: 1

Not really, anymore. I think that's the old school definition.
Now it's more an indicator on a company's balance sheet of how much it has overpaid for something, or overvalued something. For example, if they have paid huge dot-com money for some new start up, but the financials of that start up are nowhere near the value the company paid for it, the difference must be put on the acquiring company's balance sheet as goodwill. Because balance sheets always have to net out to 0, when you pay more for something than it's worth, they have to put something in there to balance it out. Goodwill.
So, I've always looked at it as a negative.
Goodwill arising from an actual purchase is different from goodwill you just make up out of thin air because you think your "brand" is worth x billion dollars and you want to try to bring future profit potential onto your balance sheet..

If you purchae a company for ten billion and acquire actual assets of two billion, you can either write the eight billion off as a loss (which would fuck up your current year's profits) or else call it goodwill and leave it on your balance sheet as an intangible fixed asset. The accounting is simple enough, and the theoretical justification is much stronger than for non-purchased goodwill. Your eight billion dollars must have bought something after all, even if you can't physically count it.

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To have a right to do a thing is not at all the same as to be right in doing it
Re:So in other words... by tehcyder · 2011-09-26 22:02 · Score: 1

Also -- Groupon's business model sucks, and it was obvious from Day 1; this is why competitors with business models that don't require the huge customer acquisition costs that Groupon does have sprung up, and why such competitors are, well, competitive -- we may not have the marketshare, but if we keep our costs down, we don't need Groupon's huge (expensive!) marketshare to be profitable, either.
Why are Groupon's customer acquisition costs so huge?

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To have a right to do a thing is not at all the same as to be right in doing it
Re:So in other words... by inviolet · 2011-09-27 04:26 · Score: 1

Because there is no GAAP way to express the value of customer loyalty,
Dude, I wish you the best of luck. Loyalty is the hot ass you crave after wedding the invisible hand.
Corporations bent on cultivating the next quarterly earnings report don't hold much enduring appeal to informed consumers wishing to build relationship equity with non-human entities. Where does the loyalty come to rest in this system? With suckers, if you can find them?
I agree that loyalty between a human and a corporation is, as a rule, farcical. And I am totally with you on the cynicism about the current socioeconomic patterns in the West.
There are exceptions, though. Not all corporations have reached the point of behaving 100% sociopathically. Some of them are still colored by the founders' personality. That coloration can be trusted -- certainly not 100%, and not forever, but not 0% either.
Also, corporations are not monolithic homogenous entities. I consider the Shell corporation to be sociopathic, but I know the owner of my local Shell station and I do trust him.

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FATMOUSE + YOU = FATMOUSE
Re:So in other words... by swalve · 2011-09-27 11:43 · Score: 1

A balance sheet is just that. It has to balance out. Instead of 3 - 4= -1, a loss is shown above the line. 3 - 4 + 1 = 0 Accounting is for accounting for where the money went. Goodwill is just a way of clarifying a loss.

at least it happened first by Trepidity · 2011-09-26 05:57 · Score: 2

If people bought into an IPO that was advertised with one set of revenues, and they were massively revised downwards after it happened, it'd be in the courts for years.

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10 PRINT CHR$(205.5+RND(1)); : GOTO 10

Re:at least it happened first by maxume · 2011-09-26 06:05 · Score: 1

It may not have been too big a deal, they are basically reporting the same numbers as before, they just aren't using the clever trick where they treat a coupon they make appear from nowhere as something that had a cost to create.

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Nerd rage is the funniest rage.
Re:at least it happened first by maxume · 2011-09-26 06:37 · Score: 1

No, same numbers in a literal sense. The net sales numbers that they are now reporting as revenues were clearly stated in their earlier filings.
I think the new statement is clearer/better, but not understanding the earlier reporting method would be a good reason to stay the hell away from IPOs.

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Nerd rage is the funniest rage.
Re:at least it happened first by GodInHell · 2011-09-26 06:52 · Score: 1

I think the new statement is clearer/better, but not understanding the earlier reporting method would be a good reason to stay the hell away from IPOs.
Although this is likely to be another buy-it-then-dump-it IPO. Get in ASAP and then sell after the e-traders come in, before it becomes clear that the stock's value is overstated.

-GiH
Re:at least it happened first by Billly+Gates · 2011-09-26 07:13 · Score: 1

Still that is illegal and highly unethical to not follow GAAP accounting principles. Yes they cleared it which would prevent legal action, but any accountant there with Groupon on their resume will have difficulty finding another job. Accountants lose their CPA for that shit.
Revenue and sales are very different. I vew it as promising to pay vendors 60 days later so they can report and give the impression of double earnings and sales growth! They counted money owed to customers which is not sales and now 2 months later that money is due and they can't hide it anymore.
Sadly, in college they do teach you these things to boast the share price at all cost in finance 101. The difference is in accounting and finance is that we marked it clearly in the books. The goal was to fool the stay at home day trader and investor who didn't look too hard into the books.

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Re:at least it happened first by tehcyder · 2011-09-26 22:13 · Score: 1

So, it would be like Walmart reporting sales instead of profit? Yeah, "same numbers" alright.
No, Groupon's profit stays the same. Using made up numbers, if originally you had 450 million sales, 200 million direct costs and 400 million overheads, you had a 150 million loss. Restated you have 325 million sales, 75 million direct costs and 400 million overheads, still leaving you a 150 million loss.

You haven't "lost" 125 million sales anywhere. Logically, the value of the company shoul dbe unchanged, as profits haven't altered, it's just psychologically the company doesn't seem as big.

Comparing or valuing companies by revenue alone is always potenially misleading

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To have a right to do a thing is not at all the same as to be right in doing it

Last one out... by haus · 2011-09-26 05:57 · Score: 1

... be sure to turn out the lights.

Re:Last one out... by EmagGeek · 2011-09-26 09:47 · Score: 1

I am sure the power company will take care of that.

Kill the bubble by Anonymous Coward · 2011-09-26 05:58 · Score: 1

Dear Groupon,

Please do everybody a favor and cancel your IPO. Any help you could give with killing the new tech bubble before it gets bigger would be greatly appreciated.

Thanks,
An American public that's been beat down enough

Re:Kill the bubble by ThorGod · 2011-09-26 06:19 · Score: 1

What new tech bubble?

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PS: I don't reply to ACs.
Re:Kill the bubble by KahabutDieDrake · 2011-09-26 18:14 · Score: 1

LOL!
Re:Kill the bubble by tehcyder · 2011-09-26 22:17 · Score: 1

Dear Groupon,
Please do everybody a favor and cancel your IPO. Any help you could give with killing the new tech bubble before it gets bigger would be greatly appreciated.
Thanks, An American public that's been beat down enough
How about the American public just doesn't buy the fucking shares if they're that over-priced? No one's forcing them.

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To have a right to do a thing is not at all the same as to be right in doing it

IBIPO? by Nethemas+the+Great · 2011-09-26 06:00 · Score: 1

Inflation before IPO? Really? Would someone really do such a thing? I cannot believe this! Where are their ethics?

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Two of my imaginary friends reproduced once ... with negative results.

Crook by DaMattster · 2011-09-26 06:01 · Score: 1

Andrew Mason is a crook! Hopefully the SEC will do what they failed to do on his previous dot com failure and that is .... Prosecute him!

Groupon is providing a valuable service by istartedi · 2011-09-26 06:02 · Score: 1

Before Groupon, we knew that markets could remain irrational longer than investors could remain solvent; but we didn't know how long. Thank-you, Groupon.

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For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?

Obligatory Family Guy by Culture20 · 2011-09-26 06:05 · Score: 2

"A textbook case of" *looks in textbook* "Fraw oo ud?"

Re:Half of $750 Million is Still Some Money ... by dc29A · 2011-09-26 06:11 · Score: 2

Investors aren't stupid when it comes to money

ORLY?

OF-COOOOOURSE! by roman_mir · 2011-09-26 06:13 · Score: 1

Of-course.

As I said about Zynga, linked in and all of these other IPOs riding the FB's coattails (which didn't even go IPO yet), this is BS.

This is another bubble, it's because people want to buy FB stock, but they can't, so it's easy to just build any on-line services, have it lose a bunch of money, but have large revenues without any profits, and then just hope to take it to IPO based on revenue alone, without any real working business plan behind it. It's just another Wall street scam.

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You can't handle the truth.

Re:Half of $750 Million is Still Some Money ... by maxume · 2011-09-26 06:14 · Score: 3, Informative

Their "profit" in the first half of 2011 was a loss of $253 million...

http://www.sec.gov/Archives/edgar/data/1490281/000104746911008207/a2205238zs-1a.htm#toc_ce79801_1

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Nerd rage is the funniest rage.

Re:Half of $750 Million is Still Some Money ... by Anonymous Coward · 2011-09-26 06:16 · Score: 4, Funny

But they made up for it in volume.

Editing no longer required by Corf · 2011-09-26 06:19 · Score: 1

"Google reportedly made a $6 billion bid for Google last December, but it was not taken up by Groupon's board." ...wait, what?

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The pain was excruciating and the scarring is likely permanent, but that just means it's working.

Re:Editing no longer required by Radtastic · 2011-09-26 11:25 · Score: 1

Groupon turned the deal down because Google would not guarantee a "break-up" fee in the event that the deal fell through based on antitrust concerns.

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You stereotypers are all the same...

Re:Half of $750 Million is Still Some Money ... by suresk · 2011-09-26 06:21 · Score: 4, Insightful

If a net loss of over $100 million per quarter counts as "profit", then yes, Groupon is turning a profit.

Groupon is losing money, facing growing competition, and has a questionable business model. The restating of revenue is just icing on the cake. They should have taken the billions Google offered them when they had the chance.

Re:Half of $750 Million is Still Some Money ... by Raenex · 2011-09-26 06:22 · Score: 5, Interesting

I guess that's only if you find them to be disingenuous enough not to chase their adjusted revenues of US$312.9 million with an investment. What the article seems to be ignoring is that Groupon is still turning a profit.

But as an investor, why would you trust these guys to use your investment wisely?

Where Did Grouponâ(TM)s Billion Dollars Go?

"Groupon raised a total of $946 million in two funding rounds last winter. It kept $136 million of it help run the money-losing company. The remaining $810 million was paid out, via stock purchases, to CEO Andrew Mason and some of his backers, including Eric Lefkofsky, and, notably, the Samwer brothers, who sold their CityDeal company to Groupon in 2010."

Do you want to be the sucker left holding the empty bag at the end?

50% off GroupOn! by bitt3n · 2011-09-26 06:27 · Score: 2

Today's deal is 50% off popular deal site GroupOn! Ever wanted to own your own website that uses quirky ad copy to sell local services at 50% off of double the retail price? Is owning a website that was the cat's pajamas 3 months ago up your alley, assuming alley cats wear 3-month-old pajamas? If so, this deal is for you!

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how many pairs of boxer shorts should you own?

Re:50% off GroupOn! by ryanov · 2011-09-26 16:55 · Score: 1

I use it all the time. Many of the deals are like "$10 for $20 worth of food" at place X. The menu prices are the menu prices. You pay $10, and there's a $20 credit that goes on your bill.
Re:50% off GroupOn! by ryanov · 2011-09-26 16:58 · Score: 1

And I don't owe you a link as you could look yourself, but... http://www.groupon.com/deals/cedar-creek?c=all&p=0

Groupon's Daily Deal by DrXym · 2011-09-26 06:28 · Score: 1

A 50% discount on their IPO stock.

Re:Groupon's Daily Deal by DrXym · 2011-09-26 20:08 · Score: 1

The basics are the underwriters pay the company floating for the stock and then they try and sell the stock for what they can get. So it is obviously in the underwriter's interests to price the stock properly in the first place. The problem I see for the underwriters is everyone knows what a dog this company is so how do you price it. It appears most trading activity will be short selling - predicting the price will tank which seems like a reasonable guess. I expect the underwriters would not want to fund the floatation or would pay bargain basement prices and slap on a huge margin to cover their asses when the stock slumps or the offering is unfulfilled.
As for the value of IPO itself, it really depends on the company doesn't it. Look at Google's shares. They started at $100 and they went up to nearly at $750 at one point. Even in the middle of an economic slump they're still over $500.

Re:Oh TFA by PickyH3D · 2011-09-26 06:29 · Score: 1

You need to reread the two companies in his quote.

Never used Groupon by adenied · 2011-09-26 06:36 · Score: 1

I've never used Groupon. But I've used Gilt and a few of the other ones. No judgement here, but I think it's sort of interesting that they get so much press. Maybe I'm an outlier.

Also I'm sort of torn on this stuff... I've used these discount websites maybe 10 times over the last couple years. 75% of the time I feel like I got a good deal (though I bet the vendor doesn't) but the other 25% of the time services aren't really what was advertised and I leave sort of feeling like a sucker. Not that I was ripped off, but that my expectations were too high.

Re:Never used Groupon by jimicus · 2011-09-26 07:23 · Score: 4, Interesting

Thing is, those websites (and Groupon in particular) are getting a bit of a reputation.
Local business gets approached by Groupon. The deal is: make a fantastic offer (around 70% off); of the remaining 30% you charge, you keep half, Groupon keep half.
In theory, you turn the influx of customers (that you're heavily subsidising) into regulars. In practise, lots of businesses have found the sort of customer who comes in on a Groupon deal is the sort of customer who never under any circumstances would even dream of coming back at full price.
Re:Never used Groupon by sycorob · 2011-09-26 07:44 · Score: 1

Beautifully said. The businesses also get over-crowded with new (one-time) Groupon customers, and their regular customers suffer. I've never seen a restaurant in Chicago offer a Groupon more than once.
Re:Never used Groupon by thsths · 2011-09-26 19:27 · Score: 1

> In practise, lots of businesses have found the sort of customer who comes in on a Groupon deal is the sort of customer who never under any circumstances would even dream of coming back at full price.
That is the key problem, yes. You can get customers used to discounts - and in fact Groupon has already achieved exactly that. To be honest, the fact that a business offers the same service for 15% of the standard price is an admission if there ever was one that the standard price is way too high.
And that is the other problem: companies could do the same without Groupon. Price sells - especially if you cut out the Groupon fat. I don't think that the service Groupon provides is worth the price. And the figures support this: if you spend half of your revenue on sales, then your products sucks.
Re:Never used Groupon by tehcyder · 2011-09-26 23:48 · Score: 1

In theory, you turn the influx of customers (that you're heavily subsidising) into regulars. In practise, lots of businesses have found the sort of customer who comes in on a Groupon deal is the sort of customer who never under any circumstances would even dream of coming back at full price.
You say that like it's somehow either the new customers' or Groupon's fault.

If you don't want an influx of customers paying less than your regulars, don't use Groupon.

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To have a right to do a thing is not at all the same as to be right in doing it
Re:Never used Groupon by tehcyder · 2011-09-26 23:55 · Score: 1

To be honest, the fact that a business offers the same service for 15% of the standard price is an admission if there ever was one that the standard price is way too high.
No, it's an admission that the business needs to make a profit, but that it can be worth sacrificing margins for volume in order to increase that profit.

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To have a right to do a thing is not at all the same as to be right in doing it

Re:Half of $750 Million is Still Some Money ... by quarterbuck · 2011-09-26 06:40 · Score: 2

If that was all - here is their filing below.
RESTATEMENT The Company has restated its previously issued Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010 to correct for an error in its presentation of revenue.
Most significantly, the Company restated its reporting of revenues from Groupons to be net of the amounts related to merchant fees. Historically, the Company has reported the gross amounts billed to its subscribers as revenue. All prior periods have been restated to show the net amount the Company retains after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in those periods. The change in presentation had no effect on pre-tax loss, net loss or any per share amounts for any period presented.
The Company has also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. These changes include presenting loyalty programs as a component of marketing rather than as an offset to revenue. The Company believes that this classification is most appropriate as it is acting as an agent on behalf of the merchant in driving traffic to generate revenue. In addition, refunds made to subscribers under the Groupon Promise are presented as a component of cost of revenue, rather than as an offset to revenue, as these amounts are not paid directly to the merchants.
Credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for all periods presented. The Company has concluded the amounts could alternatively be viewed as a cost of the service the Company is providing.

So not only did they change their revenue recognition policies, they also had an "error" which is separate. And then they had to restate revenues from their loyalty programs and credit card payments. What were they making up their accounts for two years? Crayons and Etch-a-Sketch?

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People are truly surprised by this? by EricTheGreen · 2011-09-26 06:40 · Score: 4, Informative

Please. This is a company co-founded by Eric Lefkovsky. Some of us haven't forgotten Halo/Starbelly from the first dot-com bubble. Apparently he's working his magic yet again. The slight-of-hand doesn't even appear to be so very different from the 2001 state-of-the-art.

Re:hi roman ! by roman_mir · 2011-09-26 06:50 · Score: 1

Really? Are you are Perry Voter?

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You can't handle the truth.

Missed buyout opportunities by company boards by Animats · 2011-09-26 07:12 · Score: 1

They didn't cash out by selling to Google when they had the chance. Just like Yahoo refused to be bought out by Microsoft. Big mistakes.

Next, Facebook. They missed their chance to IPO when they were at their peak.

Re:Missed buyout opportunities by company boards by Anonymous Coward · 2011-09-26 08:55 · Score: 1

They didn't sell to Google because Google wanted to look at their books first.
Re:Missed buyout opportunities by company boards by cdrudge · 2011-09-27 02:07 · Score: 1

Heaven forbid Google would like to see what they would be spending $6b on.

Re:Half of $750 Million is Still Some Money ... by aix+tom · 2011-09-26 07:41 · Score: 1

That is actually the new business model for a lot of companies it seems.

1) Create business model that does not work but attracts a lot of customers
2) Go broke
3) Sell the customer base and/or customer data to another company.

Idiots by saleenS281 · 2011-09-26 07:50 · Score: 1

I still can't believe this guy didn't sell out to google. I hope he's managed to put every penny he's gotten so far into the bank, because he lost his only shot at ever being a billionaire. Just as an anecdotal sidenote: two years ago every time my wife talked about getting some sort of deal it was groupon this, groupon that. Now her and her friends have 5-10 different sites they peruse for group deals. These guys have already lost the magic: they are no longer the "facebook" of group deals, and as such they will continue to see their revenue fall. Google way over-bid, and this guy was a fool not to run with it.

Re:Idiots by robus · 2011-09-26 08:09 · Score: 4, Insightful

My money is on Groupon's knowledge that Google's due diligence would uncover the rotten underbelly of their business and thus the deal would never have gone through and Groupon would be exposed. Much safer to bilk investors with "On The Internet" fever.
Re:Idiots by mollymoo · 2011-09-26 15:28 · Score: 2

Eric Lefkofsky is supposedly already a billionaire, though quite how much of that is based on his Groupon stock I don't know. Even if Groupon went bankrupt tomorrow he's already pulled hundreds of millions from the company so he'll not exactly be poor. You know all that investment Groupon got? Best part of a billion bucks? Yeah, that was mostly used to cash out the early investors, Lefkofsky included, at massively inflated stock prices.

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Losing money? by DogDude · 2011-09-26 08:37 · Score: 1

The big point that everybody seems to be missing is: how could Groupon possible be losing money unless the founder is pocketing every last nickel? Their revenues are *massive* (50% of every "groupon") sold, and their costs are... what? A web site? An office? Groupon is a Bernie Madoff-sized scam. Personally, I hope the IPO goes through, because I'm going to short the hell out of it about one day after it happens.

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I don't respond to AC's.

Re:Losing money? by Kalriath · 2011-09-26 09:52 · Score: 1

I've heard they employ thousands of cold-calling sales people across the globe (Groupon is in more than just the US).

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Re:Losing money? by jonbryce · 2011-09-26 10:02 · Score: 1

Their costs are advertising to local businesses in the cities they operate in. These customer acquisition costs are greater than the revenues they receive from them, and after they have experienced their first groupon influx they tend not to go back for more.
Re:Losing money? by LunaticTippy · 2011-09-26 11:19 · Score: 1

The business owners I've spoken with have all spent numerous hours talking with Groupon representatives, sometimes in person. There are lots of costs that aren't apparent to outsiders. I wish there was a way to have a daily deal that didn't funnel so much money to a distant company, but I am not about to enter such an overhyped market now.

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Man, you really need that seminar!
Re:Losing money? by PraiseBob · 2011-09-26 11:37 · Score: 1

how could Groupon possible be losing money unless the founder is pocketing every last nickel?

Funny you should say that... they had a round of outside investment and raised close to a billion dollars. Of which, $100 million went to keep the business running, and ~$800 million went to the founders pockets as a phony stock buyback. So to be fair, the founder and his friends are only pocketing 9 out of every 10 nickels.

Who cares? by raehl · 2011-09-26 10:03 · Score: 1

The net dollar amounts are the same. All they changed was whether an item was put in a category that reduced initial revenue, or increased a cost.

It's not like they said they had a smaller loss than they actually did.

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paintball

Re:Risking "No true Scottsman" by jonbryce · 2011-09-26 10:04 · Score: 1

Because if a local restaurant puts a money off offer on their website, most of the world won't see it, whereas a lot of people subscribe to the Groupon newsletter for their city

Re:Half of $750 Million is Still Some Money ... by Lunix+Nutcase · 2011-09-26 10:49 · Score: 1

Investors aren't stupid when it comes to money and they'll simply adjust their plans for the IPO.

Then how do you explain the Dot Bomb bubble?

Hmm... by Greyfox · 2011-09-26 11:10 · Score: 1

Can I get a Groupon coupon for Groupon stock? That's how it works, right?

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I'm trying to teach myself to set people on fire with my mind... Is it hot in here?

Groupon turned down google's offer because... by Radtastic · 2011-09-26 11:27 · Score: 1

Google wouldn't provide 'Break Up' Insurance' and Groupon was concerned about antitrust issues.

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You stereotypers are all the same...

Re:Groupon turned down google's offer because... by NorQue · 2011-09-26 20:36 · Score: 1

Well, judging by the cheerleading tone and the "Tour Groupon, The Funniest Startup We've Ever Been To (PHOTO TOUR)" link at the bottom it looks like msnbc has some issues staying objective on Groupon, so I'd take that article with a grain of salt.

Delightful recursion by mattr · 2011-09-26 14:33 · Score: 1

"Google reportedly made a $6 billion bid for Google"

Re:Half of $750 Million is Still Some Money ... by ppanon · 2011-09-26 19:20 · Score: 1

Ah, right. I forgot about Le Bourget because it' s no longer used for international flights.

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Re:only in the same tradition of american capitali by tehcyder · 2011-09-26 20:36 · Score: 1

What we need are noble, honest, poor people, who don't know how to do anything right, running the world.

I'd go and look up the phrase "false dichotomy" if I were you.

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To have a right to do a thing is not at all the same as to be right in doing it

Re:Half of $750 Million is Still Some Money ... by tehcyder · 2011-09-26 20:46 · Score: 1

So not only did they change their revenue recognition policies, they also had an "error" which is separate. And then they had to restate revenues from their loyalty programs and credit card payments.

No, the "error" was just the presentation of revenue as gross rather than net of merchants' fees. Presumably their auditors didn't think it incorrect at the time, and in fact it is normal accounting practice to show revenues as goss, and then show merchants or credit card fees as expenses.

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To have a right to do a thing is not at all the same as to be right in doing it

Re:Does anyone else think... by tehcyder · 2011-09-27 00:19 · Score: 1

Does anyone else think "tampon" when they hear the word "groupon"? Just me? OK, just checking.

I think of it as a contraction of "group orgasmotron", but again that's probably just me.

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To have a right to do a thing is not at all the same as to be right in doing it

Re:only in the same tradition of american capitali by CubicleView · 2011-09-27 01:24 · Score: 1

Would it not be better to point out that you considered the post to be a "false dichotomy", rather than just assume ignorance on the part of the AC.

Dont do evil by sourcerror · 2011-09-27 09:32 · Score: 1

Hey, Google said they don't do evil!

Re:Half of $750 Million is Still Some Money ... by swalve · 2011-09-27 11:34 · Score: 1

There was an asset bubble in real estate. That's what caused it.

Re:Half of $750 Million is Still Some Money ... by swalve · 2011-09-27 11:36 · Score: 1

A. Shut up.

2. Loan guarantees are expected to fail sometimes.

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Groupon Loses COO, Drastically Cuts Reported Revenue

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