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Groupon's accounting practices under SEC scrutiny
- jackowayed 15y agoThey reported all the normal numbers too, right? (Straight revenue, earnings calculated the normal way, etc.) I don't really see why it should be illegal for them to include some extra numbers, regardless of how meaningless they are, as long as they fully explain how they calculated them. If investors don't buy Groupon's claim that their marketing costs will go away once they win the market, they can just look at the standard numbers. Then again, I don't know much about S-1's and how much freedom one generally has to put more than the very essential information in them.
- hvs 15y agoS-1's require an almost pessimistic outlook for the company. It is not the place for padding your image or trying to make yourself look good. The SEC is pretty strict about that.
- jerf 15y ago"I don't really see why it should be illegal for them to include some extra numbers," For "extra numbers", substitute "lies with statistics", and it'll become clear. This application isn't the place to give the company a free-form field to put its propaganda in.
- pseudonym 15y agoConsidering the glut of posts from a couple weeks back about Groupon, along with the tone of every single one of them, the only thing I'm surprised about is the SEC apparently actually taking it seriously.
- deleted 15y ago[deleted]
- byrneseyeview 15y agoIronically, GAAP numbers are easier to game than what Groupon is reporting. For example, if Groupon were to slash their marketing budget in order to meet their earnings estimates, you'd see better net income but a minimal change in CSOI. It's just strange for this to be so controversial.
- maukdaddy 15y agoYes, but such manipulation is much easier to spot given everyone's familiarity with GAAP.
- byrneseyeview 15y agoIf everybody is so familiar with GAAP, the SEC's case is much weaker. They're arguing that investors will be too unsophisticated to differentiate between this new, weird accounting measure and the usual standards.
- jeffdavis 15y ago"if Groupon were to slash their marketing budget in order to meet their earnings estimates, you'd see better net income" Accounting is supposed to be about measuring things that are more tangible to act as a reality check against projections and optimism. It's supposed to be about where the company is at now and where it's been in the past -- not just for potential investors, but for current investors who might want to compare against their previous projections. Predicting the future is left as an exercise for the reader. Marketing expenditures, particularly for new companies in new markets, are based on projections. If Groupon is trying to attract investors based on its current profits, then slashing the marketing budget might be a reasonable course of action. But I doubt it is; they are trying to attract investors based on its potential for profits in the future, and part of that growth story involves spending a lot on marketing. With that in mind, slashing their marketing budget (or for that matter, pretty much any other part of their budget) would not make any sense, and would likely turn off investors (even if unsophisticated).
- hornokplease 15y agoStory sourced from CNBC, submitted here: http://news.ycombinator.com/item?id=2813186 http://news.ycombinator.com/item?id=2813186
- fleitz 15y agoHow is it possible to lose money with cooked books?
- deleted 15y ago[deleted]
- prodigal_erik 15y agoIf I couldn't plausibly be profitable, I still might want to convince people I'm losing less money than I actually am.