Groupon Loses COO, Drastically Cuts Reported Revenue 131
itwbennett writes "Groupon COO Margo Georgiadis has quit after just 5 months on the job and is returning to Google to be the company's president for the Americas. Groupon's founder, Andrew Mason, wrote in a blog post that the company has undergone a reorganization with Georgiadis' departure, and now sales, channels, international and marketing will report directly to him. In other bad Groupon news, the company revealed in an SEC filing Friday that it was reporting revenue before it paid fees to merchants using Groupon. 'The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in those periods,' according to the filing."
Re:So in other words... (Score:5, 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?"
Re:Half of $750 Million is Still Some Money ... (Score:5, 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:Idiots (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.