Groupon shares slump as CEO stays put

Ticker: GRPN

Groupon Inc.'s shares fell more than 10 percent, a day after the online daily deals company's board backed founder-CEO Andrew Mason, disappointing investors who hoped for a leadership change.

The company's shares, which have lost about 85 percent of their value since Groupon's high-profile Wall Street debut last year, were down more than 10 percent late in the trading day Friday, at $4.07.

The five-year-old company, known for transforming local business advertising by marketing internet discounts on everything from spa treatments to dining, has seen its business cooling since it debuted on the Nasdaq at $28 per share.

Much of the blame has fallen on Mason. The stock surged 12 percent on Wednesday, when he said he would fire himself if needed.

However, analysts reckon Mason still has the vision to grow the business.

"I can see that he still has a few arrows left in his quiver to generate additional value forGroupon," analyst Daniel Kurnos from the Benchmark Co. said.

He pointed to the faith that investors like Tiger Global Management are showing in the daily deals model.
Tiger Global, a technology-focused hedge fund, disclosed an about 10 percent stake inGroupon earlier this month. Its other recent bets include Facebook Inc and Amazon Inc.

"(Mason) has done a great job to grow the company to this point, and I think that there is a path to profitability for them if they can continue to execute on the Groupon goods side of the business and if the deals model is sustainable," Kurnos said.

B. Riley & Co analyst Sameet Sinha said investors may be looking for an outsider to come in and take a fresh look at the business but that the board is looking for help closer home.

"What Andrew is doing is that he is creating a deep bench of executives who will be able to run the company, execute and operate, while he focuses on the higher level stuff," he said.

"That's what the plan is and that's the reason why the board is giving (Mason) room to operate it."

Restoration Hardware (RH) 4-week performance after IPO

YY Inc. (YY) started trading on the NASDAQ on 21 November 2012

Chinese social media platform YY Inc. (NASDAQ: YY) visited the NASDAQ Marketsite in Times Square, NYC in celebration of their initial public offering, which occurred on Wednesday, November 21, 2012.

YY is a revolutionary rich communication social platform that engages users in real-time online group activities including online games, karaoke, music concerts, education, live shows and conference calls. As of September 30, 2012, YY had 400.5 million registered user accounts and 393 billion user voice minutes.

Address

Bldg 3-08,Yangcheng Creatve Indstry Zone No.309 Huangpu Avenue Middle,Tianhe Dist
GUANGZHOU, GNG 510655
China

Website 

http://www.yy.com

Key stats and ratios

	Q3 (Sep '13)	2012
Net profit margin	26.35%	10.86%
Operating margin	27.52%	12.55%
EBITD margin	-	16.50%
Return on average assets	24.24%	7.29%
Return on average equity	32.41%	-
Employees	1,298

OFS Capital (OFS) started trading on the NASDAQ on 8 November 2012

OFS Capital (NASDAQ:OFS), a provider of capital to North American middle market companies, started trading on Thur 8 Nov 2012.

Online food delivery company GrubHub prepares for IPO

(Reuters) - Online food delivery company GrubHub has hired banks for an initial public offering next year, according to three people familiar with the matter.

• http://www.grubhub.com/

Chicago-based GrubHub, which competes with larger rival SeamlessWeb to allow consumers to order food via the Internet or mobile phones, has selected Citigroup (C.N) to lead the IPO, two of the people said.

The company is in the process of filling out the rest of its underwriting syndicate, said the people, who requested anonymity because the IPO plans are not public.

Founded in 2004, GrubHub is backed by venture capital investors including Benchmark Capital, DAG Ventures and Lightspeed Venture Partners.

The company's revenue is about half that of SeamlessWeb, which posted roughly $60 million in sales last year, one of the people said. This pegs GrubHub's 2011 revenue at around $30 million.

GrubHub, which has more than 250 employees, has raised more than $84 million in venture funding, including $50 million in September 2011.

Last year, GrubHub acquired New York-based Dotmenu, which ran Campusfood and Allmenus.

GrubHub declined to comment. Citigroup did not immediately respond to requests for comment.

Kayak (KYAK) acquired by Priceline.com Inc. (PCLN)

Priceline.com Inc. (PCLN) is buying Kayak just a few months after the online-travel-aggregator's public debut, in a cash-and-stock deal that values it at $1.8 billion. The transaction, which would be Priceline's biggest ever, offers $40 a share in cash and stock for Kayak, a 29% premium to its Thursday close price and 54% higher than its initial public offering price. Kayak shares surged 26% to $39.18 after hours.

Priceline, which is based in Norwalk, Conn., announced that it was buying Kayak for $40 a share, in a deal worth $1.8 billion deal.

Priceline Chief Executive Jeffery Boyd cited Kayak’s “strong brand in online travel research and their track record of profitable growth”

Kayak Chief Executive Steve Hafner said joining Priceline “will accelerate our growth and help us further develop as a company.”

The announcement came just as Kayak reported its results for the third quarter.

Kayak, which also is also based in Norwalk, reported a profit of $7.18 million, or 19 cents a share, compared with a profit of $4.03 million, or 18 cents a share, for the year-earlier period. Revenue was $78.6 million, up from $61.16 million. Adjusted profit was 26 cents a share.

Analysts were expecting a profit of 18 cents a share, on revenue of $77.36 million, according to a consensus survey by FactSet.

Kayak went public in July when its initial public offering priced at $26 a share.

Groupon (GRPN) reported earnings on 8 Nov 2012

 Ticker: GRPN

Groupon sounded a discouraging note for investors Thursday with a quarterly report indicating a narrower loss but slower revenue growth for the daily deals website. Shares tumbled 16% to $3.31 after hours.

Groupon stock plunged 16 percent in after-hours trading after the company's third-quarter earnings missed Wall Street forecasts.

Groupon reported $568.6 million in revenue, below the analyst target of $592 million. It reported a loss of $3 million, or breakeven per share. Excluding stock-option and other costs, it met analysts' forecasts' of 3 cents per share.
Groupon shares hit a new low of $3.30 per share in after-hours trading, continuing a slide.
Among the trouble spots in Groupon's financials:

Cash from operations fell by one-third to $42.1 million from $64.4 million a year ago.
International revenue declined for the first time, slipping to $277 million, down from $308.2 million in the previous quarter.

Gross billings, or the total value of goods and services sold by Groupon before it splits the take with merchants, fell from second-quarter levels. It was the second straight quarter of decline, reflecting increased reliance on lower-priced products and services.

Groupon said that exchange rates were a major culprit. Without those problems, Groupon's revenue would have been $594.6 million, ahead of forecasts, and gross billings would have been higher.
Groupon forecasts revenue between $625 million and $675 million, slightly above Wall Street's average forecast of $634 million. But income from operations is expected to fall to between $0 and $20 million, down from the $25 million operating profit in the third quarter.

Groupon's stock has been falling since March, when it revised financials and warned of accounting problems.
Groupon laid off about 80 people in sales this week, as it starts implementing automation strategies previously laid out by Kal Raman, the company's new senior vice-president for sales and global operations.
The layoffs first were reported by Business Insider's Henry Blodget early Thursday afternoon.

“Groupon announced several months ago it would be using technology to increase productivity through automation,” a spokeswoman says. “We will always aim to optimize business operations wherever opportunities are identified.”

As of June 30, Groupon had about 1,120 sales staff in North America, most of them based in Chicago. Groupon declined to say where the laid-off employees are located.

Groupon has been cutting sales staff for three quarters, from a peak of 5,735 to 5,087 as of Sept. 30. That's down 500 in the past quarter, not including Thursday's cutbacks. Groupon's labor-intensive sales model has been viewed as a negative by many investors.
Mutual funds associated with Fidelity Investments, which owned 12.7 million shares when the company went public, now hold just 1 million shares after dumping 8.5 million in August, according to data from Chicago-based Morningstar Inc. The data only goes through August, when Groupon shares still were trading above $4. The fund did not return calls for comment.

Various T. Rowe Price funds loaded up on Groupon during the third quarter ended Sept. 30, adding 7 million shares, a 40 percent boost. The Baltimore-based fund company has doubled down on Groupon since the IPO a year ago, boosting total holdings to 24.8 million shares. The company did not return calls for comment.

American Funds boosted its holdings 14.6 percent in the third quarter, scooping up 3.8 million shares. The funds, run by Los Angeles-based Capital Group Cos., now hold 30.1 million shares, making it one of the 10 largest investors. The company declined to comment.

With its stock price flagging below $5 per share, and a total market value below $3 billion, Groupon faces several challenges on the stock front. It's a buzzkill for employees who had visions of riches when the stock went public at $20. And stocks below $5 have a harder time attracting mutual funds, said Morningstar analyst Mike Rawson. “It's psychological for employees,” he said. “Some funds have an unofficial rule of thumb not to invest in stocks under $5.”

** day after earnings **

What we've learned a year after Groupon's IPO

Ticker: GRPN
A year ago this weekend, Groupon went public.

• It priced at $20 a share, opened at $28, and then peaked around $30.
• Since then, it has done nothing but collapse. This week, Groupon’s stock crashed through $4 a share for the first time, setting a new all-time low.
• The company is now valued at about $2.5 billion.
• That’s one-tenth the value that some investment bankers told Groupon it was worth in the lead-up to the IPO.
• It’s down 80% from the IPO price and 85% from the first day’s opening price.

By Joseph B. Cahill

Can you believe it only has been a year since Groupon Inc.'s IPO? Seems more like 10, given how thoroughly the company has transformed from startup superstar to Wall Street has-been.

As Groupon's shares sank as much as 79 percent from the IPO price of $20—it closed at $4.47 today—expectations surrounding the daily-deal company collapsed, too. With the Nov. 4 anniversary of Groupon's IPO approaching, it's time to examine the lessons it holds for all those who expected things to be so much better for the Chicago company.

IPO investors: Be careful what you wish for. Many of you begged your brokers for a piece of the hottest IPO of the year. Instead of badgering your broker, you should have pored over Groupon's prospectus, which contained plenty of red flags that might have dampened your enthusiasm—and saved you money.

Groupon employees: The fun stops when trading starts. After a company goes public, it starts to regard employees not so much as assets to be nurtured as costs to be curtailed. Pressure to meet quarterly earnings expectations leads to many not-fun changes, like tougher performance standards, stingier compensation policies and layoffs when profits start to sag.

Andrew Mason: Shtick isn't a management style. The Groupon CEO's unconventional antics helped fuel the perception that he had discovered a better way to build a business. But Groupon's slowing growth and poor profitability since the IPO shattered that illusion, replacing it with doubts about Mr. Mason's maturity and ability to manage a business with 12,000 employees in 48 countries. Recent attempts to look more serious — like donning horn-rimmed glasses — won't dispel those doubts. Only a solid run of revenue growth and rising profits will convince Wall Street that Mr. Mason is a bankable chief executive.

Eric Lefkofsky: Talking up your company while the SEC is reviewing its registration statement doesn't only anger the regulators. The Groupon chairman and co-founder's public assurance that the company would be “wildly profitable” raised expectations Groupon couldn't possibly meet, damaging its credibility in the stock market. Similarly, the creative accounting metrics Groupon peddled only highlighted its lack of basic profits.
Venture capitalists: Do your due diligence. The rush by supposedly sophisticated VC firms to shower money on Groupon shows how so-called smart money can succumb to herd mentality. All the questions about Groupon's accounting, growth rate and profitability that came up after the IPO are the kinds of issues these firms should have unearthed upfront. Instead, some leapt aboard as Groupon taxied down the IPO runway, pumping in $950 million without asking any questions — most of which went into the pockets of Groupon co-founders Messrs. Lefkofsky and Mason, Brad Keywell and other insiders.

Chicago and the local tech community: It's a bad idea to link yourselves too closely with any single company. Mayoral photo ops at Groupon's Near North Side headquarters, along with widespread cheerleading by local officials and business leaders, helped make Groupon the avatar of Chicago's tech scene. That was great when the company's rise seemed to signal Chicago's arrival as a technology hotbed. But its fall from grace revives old questions about the city's ability to produce viable tech firms.

Just about everybody: Groupon's stunning reversal proves that your mother was right when she told you anything that seems too good to be true probably is. Its rise from nothing to the cover of Forbes in less than two years should have generated more skepticism. But the cheering drowned out the few killjoy questions about revenue and profit.

Groupon eventually may build a profitable business that grows fast enough to justify investing in it. But it's clearly not the company so many thought it was a year ago.

Restoration Hardware started trading on the NYSE on 2 November 2012

NEW YORK, NY – NOVEMBER 2: Carlos Alberini, Chief Executive Officer, and Gary Friedman, Chairman Emeritus, Creator and Curator of Restoration Hardware Holdings, Inc. ring the Opening bell at the New York Stock Exchange on November 2, 2012 in New York City.

Potbelly hires bankers for potential IPO

(Reuters) — Potbelly Sandwich Shop, a restaurant chain that sells submarine sandwiches and shakes, has hired bankers for a potential initial public offering next year, according to people familiar with the matter.

•  ticker: PBPB

Potbelly, whose backers include Starbucks Corp. founder Howard Schultz and private-equity firm American Securities, has selected Goldman Sachs Group and Bank of America to lead its planned IPO, two of the people said.

The Chicago-based chain, known for its vintage decor and live music, has over 260 shops around the United States, according to its website. In 2011, the chain expanded internationally by opening in Dubai.

The people asked not to be named because the discussions are not public. Potbelly could not be immediately reached for comment. Bank of America, Goldman Sachs and American Securities declined to comment.
Founded in 1977 by its chairman, Bryant Keil, Potbelly has roughly $250 million in revenue, one of the people said.

The original Potbelly opened on Chicago’s Lincoln Avenue in 1977, and was sold to Bryant Kiel in 1996. Within nine years Kiel had expanded its footprint out to 100 locations, and 200 locations by 2008. Now run by Aylwin Lewis, it’s on track to open its 300th location this year. The chain specializes in toasted sandwiches, and now has locations in 18 states, Washington D.C., and 12 in the Middle East. In 2012, total revenue increased 15.5 percent, to $274.9 million.