
Groupon Restates Results, Reveals Weak Controls - jayzee
http://online.wsj.com/article/SB10001424052702303816504577313983768173826.html?mod=WSJ_hp_LEFTTopStories
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jcampbell1
Groupon needs a controller's office with some self respect. What is this
bullshit quote by the CFO: "We remain confident in the fundamentals of our
business"? That is not your job. You work for me as the shareholder, and your
job is to get the fucking numbers right. Because finance and accounting
functions both fall under the CFO causes many CFO's to forget that they are
supposed to behave as controllers much of the time.

~~~
runako
> We remain confident in the fundamentals of our business

That verbiage sounds like it could have been taken from any of RIM's recent
releases, which means it could probably be used as an anti-indicator of the
company's fundamentals.

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knowsnothing613
My accounting buddy says 'Material Weakness' is code for accounting fraud.

If so, it explains why Andrew Mason and Eric Lefkofsky massively cashed out
pre-IPO, and may have left everyone else holding the bag.

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tyrelb
I'm an accountant. And it is fraud.

Andrew Mason is basically a newer version of Bernie Madoff. Except Andrew
publicly runs a ponzi scheme... AND overinflates share valuation to pump &
dump his shares.

LOL.

If he and his CFO aren't in jail over this... I don't know what! There goes
investor confidence...

f me!

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tyrelb
Why is no one calling this out as FRAUD? They clearly and intentionally
inflated results... a 200% difference off net income.

Why is the SEC and FBI not investigating? And why are there no class-action
lawsuits coming together already?

~~~
tyrelb
Actually, there are class action lawsuits starting:
[http://www.marketwatch.com/story/hagens-berman-
investigates-...](http://www.marketwatch.com/story/hagens-berman-investigates-
groupon-following-restatement-of-financial-results-and-admitted-material-
weakness-of-its-internal-controls-2012-03-30)

~~~
tyrelb
And ANOTHER class action coming together:
<http://www.digitaljournal.com/pr/646802>

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moreorless
Groupon seems to have a history of questionable bookkeeping. HN community saw
this( <http://news.ycombinator.com/item?id=3270165>) way back when.

Edit: Added link to previous GRPN discussion

~~~
byrneseyeview
There were some questions about Groupon's accounting in the past, but the
numbers Groupon initially released were actually a) more conservative, and b)
harder to game, than the numbers they ended up using. Their current financial
statements are confusing in part because their customer acquisition costs are
so volatile; when they showed operating income excluding that number, it was
way easier to see how fast the underlying business was growing.

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pbreit
This will probably fall on deaf ears because HNers love to hate Groupon but
does anyone here realize how difficult it is to account for financials that
went from $14 million to $300 million to $1.6 billion over 2 years (with a
great deal of it from very recent international acquisitions)?

~~~
maukdaddy
Oh come on. There is absolutely no excuse for fucking up accounting and
numbers like this. There are more than enough smart finance MBAs walking
around Chicago that could handle the job.

This is just further evidence of a company culture that is willing to play
fast and loose, and do whatever it takes to make themselves look good despite
terrible financials. Remember the rediculous metrics they created to hide
their real numbers before the IPO?

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anigbrowl
_Groupon's stumbles come as Congress advanced a bill, known as the Jobs Act,
that would ease the regulatory burdens on fast-growing businesses. Under the
act, Groupon, which has less than $1 billion revenue, would qualify as an
emerging growth company, entitled to immunity from annual audits of internal
accounting controls.

The Jobs Act would loosen Groupon's duties "over exactly the type of controls
that it was deficient in," said John Coffee, a law professor at Columbia
University._

Hm. I like the idea of easing the regulatory burden on emerging business, but
anything with under $1 billion in revenue? That leaves room for a multitude of
sins.

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AznHisoka
"Groupon has become a bellwether for a new generation of technology companies
that, using technology, are able to build massive scale over short periods"

If by technology, you mean lots of venture capital, and lots of money to throw
at Facebook ads + Adwords...

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tatsuke95
"The fastest growing company ever" can't get its book right? Shocking.

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byrneseyeview
Guys. This is bad news. But it's a tiny, transient issue, which they've
already corrected.

If you're serious about considering this evidence of fraud, it would be great
to get an idea of how much you've shorted since the story came out (or plan on
shorting Monday morning). Groupon's stock is down about 6% after this story,
and I don't see any comments that indicate that this raises the odds that
Groupon will collapse by a mere 6%.

While there are lots of flaws with Groupon's current model, it's not very nice
to jump on them for comparatively minor stuff like this.

~~~
prodigal_erik
Apparently there were investors who wanted to after the IPO, but chose not to
simply because there were too many others looking for shares to borrow. Has
shorting GRPN become less expensive and risky between then and now?

[http://www.bloomberg.com/news/2011-11-10/groupon-stock-
among...](http://www.bloomberg.com/news/2011-11-10/groupon-stock-among-most-
expensive-to-short-data-explorers-says.html)

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joezydeco
So the underwriters have no accountability in any of this? Not a single
mention of them in the article, go figure.

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eli_gottlieb
And the bubble pops!

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awakeasleep
Wow this surely signals the end of GroupOn. What a stupid company. They are a
big joke and nothing they do is right. This is literally an unheard of
mistake... no other company has done anything like this (and survived).

Why anyone ever invested here, why I didn't think fthe stupid idea first, I'll
never know

