

Groupon Will Dump Controversial ACSOI Accounting in Amended IPO Filing - canistr
http://allthingsd.com/20110805/exclusive-groupon-will-dump-controversial-ascoi-accounting-in-new-ipo-filing/?mod=tweet

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cjlars
So there are three adjustments to this accounting method that make it
different from normal operating profits:

1\. Online Marketing -- They excluded about $180mm of their $208mm Q2'11
advertising budget. Ostensibly because this cost should be capitalized as an
investment in customer acquisition. This isn't entirely insane, but is
abnormal. I would have broken it out into a sort of lifetime customer value
section, so that investors could understand why these costs are justified. As
it stands, we don't get a good idea of whether these marketing costs will pay
off.

2\. Stock Compensation -- This should absolutely NOT be excluded. Even though
stock based compensation is a non-cash transaction, it is still an expense for
services delivered in this quarter. There was ~$18mm excluded here.

3\. Aquisition Related -- This isn't well explained in the filing. It's
related to the loss Groupon had to take because of the earn-out conditions of
one of their acquisitions. At first glance, this appears to be a one-time,
~$200mm cost applicable to 2010 only and might be reasonable to exclude (but
it's still a warning flag, considering the outright BS in point 2).

In short: be wary of companies that fudge their numbers. There's already
plenty of ways to tweak their finances under GAAP, and in this case, it looks
like Groupon got caught trying to take a few too many cookies out of the jar.

~~~
vnchr
Yeah, but Andrew Mason got really defensive about those cookies. I suppose I
would too for an extra $100 or $200 million.

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bond
Trying to mask the reality is never a good thing...

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suking
I am guessing they are getting the shit grilled out of them on their roadshow
and I doubt it will help when these numbers come out showing huge losses.

