andrew mason

Groupon’s Fourth-Quarter Earnings (GRPN)

Source: http://www.businessinsider.com/live-groupons-fourth-quarter-earnings-2013-2

andrew mason

Groupon just announced its fourth-quarter earnings!

Revenues were slightly below what analysts expected at $638 million.

Earnings were considerably lighter. Non-GAAP operating income, ignoring stock-based compensation, acquisition charged, and depreciation and amortization, was $29.7 million. Analysts were hoping for $41 million.

Groupon is holding a call with analysts at 5 p.m. Eastern. We’ll be listening in and taking notes live.

It’s a high-pressure time for CEO Andrew Mason, who is clearly under pressure to keep his job and show that the company can show predictable growth.

Groupon’s top rivals in the daily-deals space, LivingSocial, just raised $110 million in financing from existing investors on onerous terms that valued the company at far less than earlier financings.

And Google just made it far easier for all of its advertisers to do daily-deals and discounts alongside other online ad formats.

So the entire sector’s under pressure.

That said, Groupon stock has risen sharply since bottoming out at $2.60 in November. It’s up 8.3 percent today, closing above $6 for the first time since August.

Sterne Agee analyst Arvind Bhatia has set a $9 price target on the company. In a research ! note, he says that the figures to watch are:

  • whether the core daily-deals business turns around (it declined in the third quarter);
  • whether Groupon Goods, a direct-to-consumer e-commerce business, continues posting sharp growth;
  • and what happens with marketing costs, particularly spending on search ads.

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Wednesday, February 27th, 2013 digital No Comments

CHART OF THE DAY: The Chart That Could Get Groupon’s CEO Andrew Mason Fired (GRPN)

Source: http://www.businessinsider.com/chart-of-the-day-groupon-growth-2013-1

When Groupon first arrived on the scene, it was heralded for being the fastest growing company of all time.

There is, of course, a danger to being a fast growing company. It’s hard to predict if the incredible growth is just a fad, or something that can last in the long run.

In Groupon’s case, it’s looking like it was a fad. Bloomberg ran this chart which shows that Groupon’s core couponing business has stopped growing. To grow Groupon’s revenues overall, it’s going into a new line of business — Goods, which is like a traditional ecommerce company.

The collapse of Groupon’s couponing business has led chairman Eric Lefkofsky to consider firing CEO Andrew Mason in favor of finding a new executive who understands the new businesses Groupon will have to attack, says Doug MacMillan at Bloomberg BusinessWeek.

MacMillan says Mason has a few quarters to prove he can turn the company around.

chart of the day, groupon's coupons sale growth over the last six quarters, january 2013

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Tuesday, January 22nd, 2013 news No Comments

Groupon’s Stock Is On Fire And No One Knows Why (GRPN)

Source: http://www.businessinsider.com/groupon-stock-2012-12

Groupon is on tear today for some reason.

The stock was up as much as 24%, and we’re not sure why.

The only thing we can think of is that there’s new news about CEO Andrew Mason, but we haven’t heard anything.

grpn

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mf Groupons Stock Is On Fire And No One Knows Why (GRPN)

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Friday, December 7th, 2012 news No Comments

1,000 Jobs Gone At Groupon And LivingSocial; Can The Daily Deal Sector Turn It Around? (GRPN)

Source: http://www.businessinsider.com/layoffs-at-groupon-and-livingsocial-2012-11

Daily deals title image lifehackerThe daily deal world is in turmoil.

LivingSocial just announced the firing of 400 employees, which is about 8.9% of its total workforce.

What’s more unnerving is that over the past six months, Groupon reduced its workforce by 648 positions.

More than 1,000 reductions across both businesses is a huge deal. Those reductions aren’t all layoffs; some are through attrition.

To cap it all, Groupon CEO Andrew Mason’s job was in question all week, and he only received his board of directors’ seal of approval late Thursday.

If this was happening at Facebook or Twitter — or any other major tech brand — people would be freaking out.

So why isn’t anyone freaking out yet?

Arguably, this is a recession in the daily deal business.

It’s the industry’s first, given that it didn’t exist until about four years ago.

LivingSocial told Business Insider via email about the job cuts. “After two years of hyper-growth from 450 to more than 4500 employees, these moves will align our cost structure against our 2013 plans and will help us set the company on a path for long-term growth and profitability. Specifically, they will allow us to invest more in critical pr! iorities like marketing, mobile, and the hiring of additional technology staff.”

LivingSocial told CNNMoney that it is moving much of its customer service from its headquarters in D.C. to Tuscon, “so some job openings will be available in that area.” Sales and editorial, however, have simply been “streamlined.”

The job losses reflect the shaky economic underpinnings of the daily deal business, which Groupon and LivingSocial have yet to wrestle into control.

LivingSocial posted a net loss of $566 million in Q3 2012. $496 million of LivingSocial’s loss stems from a huge writedown of some of its acquisitions from 2011, the Washington Business Journal reports. LivingSocial’s revenue also fell to $124 million in the three-month period, down from $138 million in the second quarter.

As of market close today, Groupon’s stock price is currently sitting at $4.54, according to Yahoo Finance. The 52-week range is shocking: it reached a high of $25.84. That followed six months’ of shrinking total billings at the company. (Its American business is robust; the international arm less so.)

A Groupon spokesperson tells us that its layoffs were largely due to new technology the company invested in that made those jobs irrelevant. In fact, we’re told, Groupon has 200 job vacancies open across North America right now.

And, of course, the job cuts don’t mean that Groupon and LivingSocial are going to vanish tomorrow. They’re huge businesses after all. But they are cause for concern as they illuminate potential weaknesses in the daily deal ! business model.

The main problem is operational scale.

Both companies are dependent on large salesforces. It is very difficult for them to leverage operation scale: To sell more, they need to employ more people. Groupon historically has prided itself on the long-term relationships its salesforce builds with its merchants. They have struggled to leverage self-serve, turnkey sales the way Facebook has.

In fact, Groupon and LivingSocial aren’t even tech companies. Rather, they’re email companies. Although email is here to stay for a long time, the tidal shift among consumers is away from email to instant messaging, social media messaging, and mobile phone messaging. They need to pivot into alternate methods.

Groupon is trying just that, with Groupon Goods, which so far has been a success. And both companies need to do what Groupon says it is trying to do, which is replace human-to-human selling with tech that can increase each individual worker’s selling power.

Lastly, the downturn ask whether the daily deal business has hit one of its natural ceilings: new merchants. Both companies need a fresh supply of new merchants to offer more deals, or to re-up on repeated deals. It’s an open question that both Groupon and LivingSocial now have to prove: Is there enough new merchants or incremental repeat business from merchants for the sector to continue to grow?

A thousand-plus layoffs suggest that, for now, the question lacks a satisfying answer.

Don’t Miss: Groupon CEO Andrew Mason Keeps His Job!

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Diver Shark Attack

Groupon is bleeding in the water, and the sharks are circling.

On Friday, we learned that Groupon under reported the number of returns it had in Q4, and that the company had to revise its earnings.

Then Groupon’s auditor filed a “statement of material weakness,” basically telling the SEC it would not vouch for the company’s numbers.

Yesterday, the WSJ reported that the SEC is investigating the company.

That’s not all the company has to worry about. 

Institutional investors put big money into Groupon’s IPO.  

Since that day’s highs, the stock is down more that 50%. It tanked 16% yesterday alone.

If those institutions can blame somebody else for those losses and recoup any of their own investor’s money, they will.

That means if those investors catch even slight whiffs of fraud out of Groupon – and trust me, they are sniffing – the lawsuits and subpoenas will come in rapid succession.

Ever seen a shark frenzy?

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Groupon sad girl

The Securities and Exchange Commission is looking into why Groupon revised its first quarterly earnings report as a public company, according to a report in the Wall Street Journal.

Groupon made the revision on Friday after market close, when the company discovered that a higher number of customers than usual returned their coupons unused in January, says the report. The revision increased Groupon’s loss by $22.6 million.

Groupon’s stock plunged almost 17% today.

The Journal reports that the company’s chief accounting officer Joe Del Preto discovered that the number of refunds in January was higher than all of Groupon’s models had predicted.

According to the Journal, Groupon did not have enough money in its reserves to cover the refunds.

The SEC has not launched a formal investigation, says the report. Groupon’s top execs have reportedly examined the situation and are confident that only certain types of coupons are being returned.

So this could all blow over and turn out to be no big deal. But drawing the attention of the SEC is never a good thing. Especially when Groupon had to amend its IPO filing twice after the SEC complained.

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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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