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Businesses The Almighty Buck

Groupon Puts IPO On Hold 129

Posted by Soulskill from the holding-out-for-a-better-group-rate dept.
With his first accepted submission, quantr tips news that Groupon's IPO plans, which triggered skepticism about its high valuation and furthered claims of a new dot-com bubble, have been put on hold amid regulatory concerns and worries about "market volatility." According to the WSJ, "When the company filed to go public in early June, it attracted criticism for its high marketing costs and unprofitable business. The company was also asked by the Securities and Exchange Commission to remove an unusual accounting metric, dubbed Adjusted Consolidated Segment Operating Income, which painted a more robust picture of its performance. Last week, the SEC also contacted a Groupon attorney over a different matter, said a person familiar with the situation: a leaked internal memo from Groupon Chief Executive Andrew Mason to his staff, in which he touted the company and blasted its critics. Making public statements about the financial status of a company during an IPO process is prohibited by SEC rules."
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Groupon Puts IPO On Hold More

Groupon Puts IPO On Hold

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  • With his first accepted submission... (Score:3, Insightful)

    by dcollins ( 135727 ) on Tuesday September 06, 2011 @07:20PM (#37322076) Homepage

    Who gives a shit? Stop wasting time/attention with that crap.

    • Re: (Score:2, Informative)

      by elbonia ( 2452474 )
      +1000, it adds nothing to the article. WTF is the purpose of pointing out a user's 1st submission?

      • Re:With his first accepted submission... (Score:5, Interesting)

        by real gumby ( 11516 ) on Tuesday September 06, 2011 @07:36PM (#37322160)

        WTF is the purpose of pointing out a user's 1st submission?

        It reminds everybody that it isn't just the same set of contributors, and that it's worth submitting a story. I like it, actually.

        • Re: (Score:2)

          by Ihmhi ( 1206036 )

          I remember the days when you'd see a coondoggie submission nearly every day.

        • it reminds the masses that they too can partake of the fabulous wealth that comes from being a slashdot submitter.

          not only will your hair become full and lush, your abs spontaneously pectate, the chicks will dig you!

          or if you are gay, the guys.

          whatever. you get the idea.

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        The Slashdot editors probably want to point out that they don't ONLY post stories submitted by a few favoured blog spammers.

        Actually, maybe they took some flak for it because there's been a lot less of the usuals lately.

        • The last site upgrade made it pretty much unusable. I took a six month break from actively participating. it seems to be more usable now. If It still takes me 1 minute to post, I'll disappear for another year. But yes, some of the spam was pretty annoying. It was cute for the first ten years, but its been getting old. Fewer good stories, fewer insightful comments. Less reason to spend time here.

    • It's four words. Jesus, get a grip on yourself.

    • Are we really that cynical/lazy/ADD that we have to criticize one small phrase in the summary? Relax.

    • The story is not important to him. All he wanted was to see if his website would hold the load of being /.'ed

    • In 2010 Groupon lost $456M. [maximumpc.com]

      Let's put that money in perspective:

      - That's like crashing a Bugatti Veyron nearly once per day. Almost exactly once per day if you assume they get their money for the scrap metal back.

      - That's like crashing a Cessna Citation X (high-end business jet) roughly once every 18 days.

      - That's roughly equal to crashing an A380, then getting another one half-built, and setting it on fire within a year.

      - That's nearly 1/3rd the cost of the Burj Khalifa, except with nothing to show for it.

    • To maximize the irony please post as much as you can in this subthread.

  • a spam organization would lie to me

  • Mark my words. ... (Score:2, Funny)

    by Anonymous Coward

    Goupon's stock after IPO will be worth as much as its coupons.

    • I agree...
      Groupon "seems" to be a strange scheme...
      Not as transparent, as say, my sig line! :P

  • A Groupon pitfall (Score:4, Interesting)

    by al0ha ( 1262684 ) on Tuesday September 06, 2011 @07:32PM (#37322140) Journal
    There's a local Indian eatery my wife and I enjoy from time to time. The service was always excellent until the time when our visit happened to coincide with a Groupon special. We walked in and noticed right away that the place as far busier than usual. Unfortunately that had a detrimental effect on the service, which stank and we were pissed off once we learned it was a Groupon night, as we paid full price for crap service and we are regulars.

    Too bad for the restaurants in large cities which get sucked into trying Groupon. You place gets filled for one night with cheapskates, who then move on to the next Groupon deal restaurant the following night, and so on... You f'd over regular customers for a bunch of 20-somthing cheapskates - we have not returned and may not.

    The whole point of coupons and specials is to get people to try your restaurant and then come back if the person likes it. However with Groupon I doubt very much this works as the only people using Groupon are the types that are eating at the next local Groupon special as all they care about is the deal.

    • Re: (Score:2)

      by dada21 ( 163177 )

      I run a little private forum where my friends and their friends can post businesses that offer Groupons so we can avoid them.

      I thought about creating a free smartphone app that let's you check if a business ever ran a deal with a daily deal site. I don't do daily deals -- and I expect full service at a full price.

      • Re: (Score:2)

        by WNight ( 23683 )

        Ohhh, good idea. I haven't noticed the problem myself but a lot of people complain about coupon redeemers so they'd probably try a free app to avoid them.

        It's got iPhone written all over it.

        It sounds fun. Have you written this sort of thing before? Were you serious?

        If not I might do a web app of it - scrape Groupon/etc and build a list of what to avoid and when.

      • Re: (Score:2)

        by kurthr ( 30155 )

        Great idea! Creating a public app has it's own pitfalls, but if groupon (and other coupon writers) can create negative externalities on normal buyers to make their money... then we can create market pressure on their customers to make them stop... "free" markets only work when they are transparent and reciprocal (among other requirements).

    • I'm surprised that this kind of thing would happen, because as far as understand it there's no such thing as a 'Groupon Night'. You may only have a couple days to -buy- the Groupon, but once you have it, you usually have weeks or months to use it. Why would all the Groupon people show up at once?

      Unless, perhaps, that particular restaurant -chose- to make their Groupon so specific, in which case it sounds like it's their own fault they got hammered.

      • Groupon does do "tonight only" deals, I think it's called GroupOn Now or something like that.

    • Re: (Score:2)

      by Nursie ( 632944 )

      You f'd over regular customers for a bunch of 20-somthing cheapskates - we have not returned and may not.

      Not that I'm disagreeing with your central point, but the only person I know who actually uses Groupon is my mother, who is quite some way from her 20s now.

    • You f'd over regular customers for a bunch of 20-somthing cheapskates - we have not returned and may not.

      I'm curious why you'd write them off completely based on a single night. Sure, it was a bad business decision on their part--they like many others might not have known the serious issues with doing Groupon promos. And yes, you paid full price for crap service that one night. If you're a regular, can't you try speaking to the owner next time you're there to explain yourserious issues with them last time, and give them at least one chance to make things right for you?

      I admit my crappy service threshold is a t

      • I admit my crappy service threshold is a tad high—it took three bad experiences at two locations before I gave up on a franchise.

        I don't think that's high. I agree, it doesn't make sense to write off a restaurant for a single bad experience after repeated good experiences. "Vote with your dollar" is the usual mantra, but for a small/local restaurant "Talk to the manager" is probably more effective.

        Perhaps the GP was already on the fence about the establishment, with the raw GroupOn deal only bei

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        I'm curious why you'd write them off completely based on a single night. Sure, it was a bad business decision on their part--they like many others might not have known the serious issues with doing Groupon promos. And yes, you paid full price for crap service that one night. If you're a regular, can't you try speaking to the owner next time you're there to explain yourserious issues with them last time, and give them at least one chance to make things right for you?

        One thing about being a regular is, especi

        • What? You tell me in one sentence that it costs way more to recruit a new customer and then in the next, you tell me that taking a 50% cut in revenue is bad to get a customer, which is it? If the restaurant can get 50% of the revenue for a new customer, and let's face it at some places that is probably breaking even or close to it (other places not so much), that is somehow too costly?

    • Regulars accept that service is not identical from night to night. You're not a regular, you're a jackass with a self-entitlement complex.

      • If regulars can't expect the same service every time, can the restaurant expect the same payment every time?

        Gosh yeah, he sure feels self entitled, only thing he does is pay and probably tip and expect service in return. How DARE HE! Burn him I say! Whip his ungrateful body until he begs for cold food and crap service as the undeserving dog he is.

      • Re: (Score:2)

        by GauteL ( 29207 )

        "Regulars accept that service is not identical from night to night"

        Yes. But most also expect to pay as little as others on the same night. If you release lots of half price vouchers to people but let your regulars eat full price on that same night, you can't expect them to be happy about it if they find out. Deals offered only to new customers often piss their existing customers off and I've certainly changed mobile phone operator before, simply so I could get a "new customer" deal.

        If this restaurant wanted

        • That makes no sense whatsoever. Several local schools have fundraisers of selling coupon books to local businesses. My full price lasagna tastes just as good if the guy next to me is using a coupon. The OP's restaurant wasn't giving out discount vouchers; they were selling discount-rate gift certificates. The only unusual twist here is that a lot of people happened to be cashing in their certificates on the same night.

          I'm a regular at a few restaurants. My "compensation" is that I can always get a table qui

        • Re: (Score:2)

          by adolf ( 21054 )

          Suppose that Dominos publishes great coupon in the newspaper on game night, which causes a flood of orders and slows down the process of me getting my food.

          Meanwhile I don't subscribe to the newspaper, so I never see the coupon and pay full regular price. And I don't follow sports, so I have no idea that it's likely to be a busy time in the pizza business that night.

          I get service that is just as slow as everyone else that night, and I pay more do so. Should I be grumpy about that?

          Why?

        • It wasn't a deal offered only to new customers. Anyone could have bought the Groupon, even the pissy regular. He chose not to buy a voucher for a discounted rate so he doesn't get the deal. (Maybe he didn't know about it, oh well. Coupon clippers pay less than non coupon clippers.)

    • Where's the pitfall? The place was packed with customers and you're just pissed off because a place that was usually empty was not - and you're making assumptions about every single Groupon customer. I use Groupons all the time, and if I found a restaurant off of Groupon that I really liked I would definitely return again, and while I may be a minority in that regard, I think having 4 or 5 return customers out of 100 that stop in because of the Groupon ends up being a good deal. It doesn't sound like you're

  • They should have taken Google's offer (Score:4, Insightful)

    by billstewart ( 78916 ) on Tuesday September 06, 2011 @07:38PM (#37322172) Journal

    I don't know what Google was thinking offering them $6B for the company a while back, but I especially don't know what Groupon's owners were thinking for not taking it. Yes, most of it would be in Google stock, that's just fine (even though it would decline a bit after everybody figured out that Groupon was a dumb idea at that price.) Yes, they'd lose a lot of their autonomy, but you don't build a coupon-advertising company to change the world, you build one to make money, and that was real money.

    • Re:They should have taken Google's offer (Score:5, Insightful)

      by __aazsst3756 ( 1248694 ) on Tuesday September 06, 2011 @08:10PM (#37322340)

      Exactly, $6b was a huge premium, and was likely peek valuation.

      The IPO is on hold because investors are figuring out that Groupon is not profitable, the business model is too easy to duplicate, and customers are starting to figure out it was not worth the cost and trouble.

    • Re: (Score:1)

      by Anonymous Coward

      and it's no surprise that from the guy who didn't take google's $6B offer we also get this gem:

      "...he touted the company and blasted its critics. Making public statements about the financial status of a company during an IPO process is prohibited by SEC rules."

      so, with all the IPO wealth on its way to his pockets, he didn't bother to inform himself about pre-IPO rules -- or at least hire the right people (lawyers) who could inform him. wow.

      • Re: (Score:2)

        by blueg3 ( 192743 )

        Informing yourself about IPO rules is pretty unlikely. They're not exactly simple. On the other hand, not hiring a bevy of financial advisers and lawyers and then taking their advice? Pretty dumb.

        • Re: (Score:2)

          by DrXym ( 126579 )
          It sounds like Groupon's communications VP walked just prior to this email going out. Of course it might be a coincidence or it might be that he was strongly advised not to do what he was doing, chose to do it anyway and the VP resigned rather than be party to it.

    • Problem is I think they knew they couldn't get it (Score:4, Interesting)

      by Sycraft-fu ( 314770 ) on Tuesday September 06, 2011 @09:41PM (#37322792)

      Remember offers like that are contingent. They aren't a "Company A makes offer, Company B says 'I accept' and it is done there, no further discussion." Had Groupon said they were interested, the next step in negotiations would have happened. Specifically, NDAs would be signed and Google would get to go over their assets with a fine tooth comb. They'd see all their financials, what all they have in terms of people, material, IP, and so on, and then decide if they wanted to go through with the deal.

      It is the same sort of thing as when you buy a house. When you make an offer and the seller accepts, that is the first step, not the last. There are more things done like an appraisal by the bank, a home inspection, a title search, and so on. If it turns out there's a problem, you don't buy it. That you had said you would was contingent on everything going right.

      So my bet is Groupon knew they couldn't survive the scrutiny, and that if Google then backed out, it would be damaging. While Google would likely be NDA bound not to say why, questions would be asked and investors would figure it out, they'd realize that Google had found that Groupon was BSing.

      I think they hoped they could pull a fast one on people in IPO. Remember while there's public disclosure it wouldn't necessarily be as intense as Google's examination and more importantly, people wouldn't have to look at anything. If they got caught up in the fervor and bought, well then tough shit for them. It's all on the people who buy the stock to do their due diligence.

      That's my bet. They knew that Google wouldn't bite once they knew the full story.

      • Re: (Score:2)

        by afidel ( 530433 )
        That's why you make a very large no fault breakup payment part of the acceptance. Deutsche Telekom did this with the AT&T merger and looks likely to make $3B and still get to sell the company to someone else.

      • I think they hoped they could pull a fast one on people in IPO. Remember while there's public disclosure it wouldn't necessarily be as intense as Google's examination and more importantly, people wouldn't have to look at anything.

        Yes, this is a crucial point. With an IPO, they are required by the SEC to issue a prospectus. However, the SEC makes no claims to actually review said prospectus, so the document could say "we have no revenue and an unsustainable business model and we want to burn your money i

        • Well - kind of. The SEC does some reviewing but....

          The big point is that the outside auditors and the invesment banks do sign off on it. And while there is a fine line between hopeful optimism and fraudulent statements of facts, the auditors and banks can pay big fines if they find themselves on the wrong side.

    • Re: (Score:2)

      by elrous0 ( 869638 ) *

      I especially don't know what Groupon's owners were thinking for not taking it.

      As the great Kenny Powers once said, "Sometimes when you bring the thunder, you get lost in the storm."

  • How's that $5 billion looking now? (Score:2, Insightful)

    by Anonymous Coward

    Groupon was an idiot for not taking Google's buyout offer. Groupon isn't Amazon, it's not ebay. Nothing it does demands customer loyalty. If Groupon takes 5% of a restaurant's gross for that night (I'm making that number up) in exchange for 250 customers, what's to stop Noupon ("New Groupon") from promising the same amount of customers but for only 4% of the night's take? Groupon is a great idea, but unfortunately one that is easy to copy and do way better. Just google "Groupon regrets" and you'll see

    • I agree. This was a con where the con-artist got greedy and overreached. They should have taken Google's money and ran for the hills. Now they're going to be revealed as an empty bag of air.

    • Re: (Score:2)

      by Alascom ( 95042 )

      Parent comment is right on the mark! Except for the 5%... Try 30-40%. And yeah, I bet GroupOn is looking back on that offer from Google and wishing they would have taken it.

      • And that makes you wonder how they're running broke. They get more profit than the restaurant does (they don't buy the raw food materials). In fact, they probably profit on running restaurants into the ground. The fact is, this type of coupon is only a good game for high-margin businesses. Spa services, restaurants, and the like would be crazy not to take advantage of probably the most convenient form of 2-tier pricing. One of the restaurants I found on Groupon and continue to go to regularly makes it

    • The google offer was contingent on seeing their books, and I bet if google had seen their books a bit closer there would be no $5billion offer.

      • Oh no only $5 billion how will they afford anything but Top Rameon noodles to the cofounders.

        Please ... Ego must be insane in these clowns! If I were offered $25 million ... that is hundres of times less ... I would smile and say yes and retire rich. That is a ton of money. $5 billion is what the Google CEO's are probably really worth if you count their actual revenue rather than Wall Street valuations. Seriously even if they only owned 10% of the company that is $500 million in cash.

        I would be happy and us

        • difference is, they've probably already blown through $25 million in VC funding paying for things like super bowl ads and infrastructure.

          • Well they deserve what they get which is 0 then.

            Good rockstar CEOs and businessman and leaders horde cash too

  • Someone pinch me, am I dreaming? Surely something must be wrong....

    • Oh yes, they're doing their job.

      They just aren't working for the people that you think they're working for. ;)

    • HAHAHAHA... same here! Mod this up.

  • Groupon is one of the companies that should have their market cap measured in years in prison.

  • I forgot who said it (Score:3)

    by Voyager529 ( 1363959 ) <voyager529NO@SPAMyahoo.com> on Tuesday September 06, 2011 @09:50PM (#37322830)

    but Groupon's biggest issue is the fact that it's very difficult to differentiate itself. Yes, they were the first one to achieve any critical mass as to what they do. However, it doesn't really require any kind of exclusivity - very few people subscribe to multiple cable companies or cellular carriers, whereas it's much easier to subscribe to 3 or 4 Groupon clones. The kind of people who regularly use the service also likely use a few others, which means that Groupon's success hinges upon which companies are willing to do business with them as opposed to the clones. Similarly, Groupon users are only as loyal as long as Groupon can have better deals than everyone else, on products people want.

    tl;dr: Groupon is in the business of selling bargains to bargain hunters, which means that loyalty rarely factors into the equation; the lack of loyal customers in a market with a low barrier to entry doesn't bode well for an IPO.

    • Re: (Score:2)

      by blueg3 ( 192743 )

      Not that I disagree, but the same can be said of a lot of services -- discount chains, social media platforms, etc.

      • I'll counter-argue:
        - Discount chains have the higher barrier to entry of brick-and-mortar storefronts, physical product, and delivery systems.
        - Social media platforms have the lock-in (effective loyalty) of positive network effects.

        Of course neither is insurmountable, but it's a damn sight better than emailing some coupons to end-users.

    • I subscribe to Groupon's daily emails. I do also subscribe to LivingSocial. I do NOT scour all the bargain hunting web sites out there. Nor do I trust most of the clone web sites. I hate getting too many junk emails every morning, so that's a certain amount of loyalty they've earned. If they keep promoting mostly spas or expensive getaways, they might lose that.

  • Groupon is doomed to fail (Score:3)

    by DrXym ( 126579 ) on Wednesday September 07, 2011 @03:20AM (#37324334)
    Groupon have massive overheads, countless other companies offer similar services (often on more favourable terms for businesses), they're generating bad word of mouth everywhere they go and their daily deals are turning to crap. Businesses are slowly realising that offering the same goods and services at 25% income to a bunch of random freeloaders is not a good promotion. Groupon site visitors are slowly realising that more and more offers are along the lines of fish pedicures, eyebrow waxes, haircuts and so on.

    There was already some fairly convincing comment when the IPO was first announced that Groupon operated like a ponzi with later investors paying for the early investors to exit. The IPO, should it ever happen has disaster written all over it. I wonder what deep discounts investors can look forward to on their stock when the realisation sinks in.

  • a leaked internal memo [...] public statements prohibited

    Is anybody else not seeing why this is a problem?

  • The latest developments in stock market are such that too many people believe they need to buy a "social media" type of stock but they can't get their hands on FB.

    We just had this story [slashdot.org] - Zynga Seeks $1 Billion In IPO. Well, everybody was trying to go IPO. LinkedIn is another example.

    The point to recognize is that none of these companies are actually profitable, yet they are seeking billions of dollars in IPO sales, because the new model is such that you start a website, some form of 'social media' and th

    • Re: (Score:2)

      by Ambvai ( 1106941 )

      http://techcrunch.com/2011/07/01/zynga-financials/ [techcrunch.com]
      "Zynga finally filed for its IPO today, and we now we get to take a look at its financials. At a high level, the company made nearly $600 million in revenues last year, and $90 million in profits. ...
      The good news for investors is that Zynga actually makes a profit."

      • Right, but you should then take a look at their "profits" a year and 2 years before that:

        After a $53 million loss in 2009, it swing to a $90 million net profit in 2010. And profits grew 84 percent in the first quarter of 2011 to $11.8 million.

        so they can swing by that much and you think it's a company that is really not hyped up and has a steady revenue and profit and can be actually evaluated to a billion IPO based on 3 years of performance record?

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