Markets

Groupon: Ignore Our Chairman's Remarks About Being "Wildly Profitable"

By Constantine von Hoffman

Updated on: July 14, 2011 / 9:48 PM EDT / MoneyWatch

In an astounding move, Groupon has filed a new version of its IPO S-1 which essentially says, "Ignore what the chairman of the board said about how we were going to be wildly profitable."

In the statement Groupon back-peddled faster than a gazelle on a blind date with a lion:

"You should not rely on a reported statement in a June 2011 news report by our co-founder and Executive Chairman [Eric P. Lefkofsky] in making your investment decision."

The day after the IPO was initially announced Lefkofsky told Bloomberg, "Groupon is going to be wildly profitable." Groupon does not deny that Lefkosky said this. Bloomberg has not responded to a request for comment on the matter.

Apparently because Groupon couldn't dispute the quote's accuracy, the company tried to weasel out of it in other ways. The S-1 claims the chairman didn't agree to be interviewed and that Groupon had tried to get Reuters not to publish it. "The reported statement does not accurately or completely reflect Mr. Lefkofsky's views and should not be considered by prospective investors in isolation or at all."

Which is just a longer way of saying, "His remark was not intended to be a factual statement."
So Mr. Lefkofsky's simple declarative sentence left something out? If it doesn't reflect his views then should we can assume he thinks it is going to be a flop. As BNET's Jim Edwards pointed out, this would be more in keeping with what are usually referred to as the facts.

Nor was this the only attempt to pour cold-water on the IPO. A letter from CEO Andrew Mason to potential shareholders was dropped from page 1 to page 32 and significantly rewritten.

One example:

From the original: "As with any business in a 30-month-old industry, the path to success will have twists and turns."
New version: "As with any business in a 30-month-old industry, success for our investors is not guaranteed. We have yet to reach sustained profitability and we have no shortage of competition."

And another:

Original: "This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth."
New version: "This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges. While not a valuation metric, it provides us with critical visibility into our business."

As best as I can translate it, the last sentence means: "This is a bright and shiny number we like to look at. We are sorry if you thought it told you anything."

Hmmm, nothing odd about this at all.