Groupon amends IPO filing

Analysts disagree on consequences for company's IPO

Groupon revised its initial filing with the U.S. Securities and Exchange Commission and filed new papers Wednesday that show a different financial situation for the Internet phenom.

The company, which made a big name for itself in the daily localized deals business, raised eyebrows in June when it filed papers for an initial public offering with the SEC. Critics reportedly called out Groupon for accounting calculations that did not factor in big expenses and raised questions about its accounting metrics.

Groupon said in an amendment to its SEC filing on Wednesday that executives stand by their original calculations of the company's gross profit, but the company also provided new figures that include big expenses for marketing to new users.

In the June filing, Groupon said it generated an operating income of about $60 million in 2010 and about $81 million in the first quarter of this year.

In this week's amended filing, the company reworked its accounting metric and reported $345 million in online marketing expenses. It also increased its operating losses to $420 million for all of last year and $117 million for the first quarter of this year.

Analysts from PrivCo, a financial research company focused on privately held companies, said the change in Groupon's numbers, along with increased competition in the daily deals market, could put the company's IPO in "serious jeopardy." The report also noted that its analysts think it's likely the company will delay or withdraw its move to go public.

Zeus Kerravala, an analyst at Yankee Group, said Groupon is in a tough spot but he doubts that it will derail the company's IPO.

"There's no doubt it will impact their initial valuation," he said. "I doubt it was a tactic -- more of an error. It can give the perception they were hiding something, which causes investors to lose confidence."

However, Kerravala added that there's a lot of excitement around Groupon and its daily deals business, and that will give the company a big boost in tough times.

"I think there's an argument to be made that the size of the user base is the real value, and for [Groupon], that is huge. You can market and sell more to a bigger audience than a smaller one."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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