Monday, September 26, 2011

Groupon's rollercoaster ride leading up to its IPO



It's never a dull day for the daily deal giant
Technology trends and news by Hannah Young


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One of the year’s most highly-anticipated IPOs has become one of the more questionable. And, it's not because of the sluggish economy.
Late this week, Groupon submitted a restatement to its initial filing to go public that said it would change what it counts as revenue from gross to net—effectively cutting reported revenue in half. Coupled with this came the announcement of the resignation of chief operating officer Margo Georgiadis after just five months on the job.
This double dose of bad news will likely increase speculation over Groupon’s business model and finances, which have been under scrutiny since the daily deal leader filed to go public.
Under Groupon’s restatement of revenue, the company will count as revenue the value of a sale minus commission paid to the merchant. Previously, Groupon did not take into account merchant fees, instead counting the entire value of a sale as revenue.
For example, before restatement, a Groupon sold for a sailing lesson would be counted in its entirety toward revenue, though a cut of the sale goes to the merchant.
Groupon announced the restatement following discussion with the Securities and Exchange Commission, according to The Wall Street Journal. This change in calculation of revenue drops Groupon’s reported revenue for 2010 from $713.4 million to $312.9 million.
In tandem with the restatement was the announcement that Georgiadis will return to Google, where she was formally the vice president of global sales and planning. She will return as president for the Americas.
Groupon CEO Andrew Mason said that Groupon has expanded its executive staff by 57 percent since the beginning of 2011. “It would have been great if I could say that we batted 1,000%,” wrote Mason, In a blog post.
“But that’s rarely the case.”
He went on to share a note from Georgiadis where she wrote, “It was a hard decision to leave as the company is on a terrific path. I have complete confidence in the team’s ability to realize its mission.”
A person familiar with the situation said Georgiadis didn’t fit in at Groupon and Mason often went around her to other executive, according to The Wall Street Journal.
In the blog post, Mason said Groupon will use Georgiadis’ leaving as “an opportunity to reorganize in a way that reflects our evolving strategic priorities.” The sales, channels, international, and marketing departments will now report directly Mason.
A rocky year
Last year, Google offered Groupon a buyout of $6 billion but Mason turned it down in lieu of taking the company public. Friday’s announcements are just the latest in what has been a dramatic ride for Groupon since it filed its S-1 with the Securities and Exchange Commission June 2.
In late August, an internal memo written by Mason to company employees leaked to The Wall Street Journal’s AllThingsD during a quiet period when Groupon wasn’t allowed to make any public statements, per SEC regulations.
“While we've bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it's important to me that you have the context necessary to brush this stuff off," Mason said in the memo, according to report.
Mason was referring to an article that called into question the company’s accounting methods. The SEC is currently looking into the matter, but along with criticism over the possible breaking of regulations came criticism of Mason’s leadership style.
Two weeks after the memo leaked, Groupon told The Wall Street Journal that it had intended to go public after Labor Day but was reevaluating IPO plans due to stock-market volatility. The company also canceled its IPO road show.
Mason has been trying to lead Groupon to an IPO valuing the company into the $20 billions. The company came under scrutiny after its initial filing, however, because it showed Groupon as profitable using an accounting method frowned upon by Wall Street. When resubmitting its numbers in the form Wall Street prefers, the company showed that it was in fact, not profitable.
Groupon notes that revenue is growing this year, however, stating that revenue for the second quarter of 2011 was $392.6 million. This is over ten times the $38.7 million the company earned during the same period last year.
Though this is positive news for Groupon, it appears to be seen whether its turmoil or triumphs will resonate more strongly with investors should it IPO.
Groupon was unavailable for a comment.

Saturday, September 17, 2011

High-speed rail agency ordered to reach more minority businesses


The California High-Speed Rail Authority was ordered thursday to greatly expand its outreach to and inclusion of small and disadvantaged businesses, concluding a civil rights complaint filed last year with the U.S. Department of Transportation.

According to the decision released by federal officials, the rail authority -– which is tasked with building an ambitious high-speed line from San Francisco to Southern California that could cost as much as $65 billion -– must create a development program for small and disadvantaged businesses, specify an officer in charge, compile a directory of all firms that are eligible to participate, and create a business advisory council within 60 days.

The rail authority must also conduct an availability and disparity study within one year, according to a copy of Thursday's decision from the Federal Railroad Administration.

"We're very pleased with the decision," said Oren Sellstrom, an attorney with the Lawyers' Committee for Civil Rights of the San Francisco Bay Area. "It's a complete vindication of what the minority business community has been saying."
Sellstrom said his group began looking into the rail authority's contracting practices over a year ago. The complaint alleged the authority's contracting policies appeared neutral but had a severely disparate impact on minority-owned businesses.

Sellstrom said Thursday's decision shows the rail authority is "nothing better than an anti-competitive old boy's network that needs to be broken up."

Rachel Wall, a spokeswoman for the authority, said the agency has already embarked on many of the changes ordered by the federal agency, including the construction of a small business program that she said is nearly complete. The authority is also using other strategies to better engage with small businesses, such as hosting industry forums, she said.

"This is the largest infrastructure project this state has seen in more than 50 years. It is imperative that we work with our business community to provide opportunities for business at all levels -– the project will be stronger for the effort," Wall said.

Thursday, September 15, 2011

Sustainability Hits the Fast Lane at the Frankfurt Auto Show

Sustainability Hits the Fast Lane at the Frankfurt Auto Show

By Ted Grozier
As we reported earlier this year from Geneva and New York, sustainability is more important to the auto industry than ever before.
At the 64th "Internationale Automobil-Ausstellung," Frankfurt's annual auto extravaganza in car-crazy Germany, nearly all of the significant vehicles revealed have a sustainability story to tell. The September 13-14 press preview will be followed by a public show through the 25th of September, with 900 exhibitors from more than 30 countries here.
Small (and Light) is Beautiful
Sustainability is the dominant theme in the auto industry today because of aggressive legislation that targets manufacturer-average fuel economy of 54.5 mpg by 2025 in the U.S. and an equivalent of 57.6 mpg in Europe by 2020.
bmw i8But to meet new regulations, automakers have to first satisfy the laws of physics. Moving more mass takes more energy, which consumes more fuel. After decades during which car model became heavier with each generation, we're finally seeing the trend reverse. For example:
  • The new Porsche 911 is 100 pounds lighter than its predecessor.
  • Daimler's Smart Forvision concept -- a hint at the next-generation iconic city car, features extensive use of weight-saving plastics, including what partner BASF calls "the first all-plastic wheel suitable for high-volume production."
The stunning i3 and i8 concepts (i8 pictured at left) from BMW preview the production cars that will arrive in 2012 and 2013, respectively. Aside from their EV credentials, both vehicles feature weight-slashing carbon fiber as replacements for the steel used in conventional vehicles. The Audi A2 concept follows a similar theme but hints at less carbon fiber and more aluminum, with a minimalist design direction compared to the curves of the BMWs.
Even Land Rover, previewing the 2015 replacement for its venerable Defender (which can easily trace its routes to the 1948 original) showed a DC100 concept that features "a lightweight, mixed-alloy platform" with "cutting-edge, sustainable, hi-tech materials taken from aerospace industries." A report from an industry insider suggests this may drop more than 1,000 pounds -- critical to meeting fuel-economy targets.
Beyond the news on direct weight-saving measures, some of the most interesting and well-received vehicles at the show have the common virtue of small size, showing the direction in which the overall industry is headed.
One of the stars is Volkswagen's Up! (pictured below), a charming city car that will slot well below the Golf and even Polo in size. It goes on sale in Germany at the end of the year, and might come to America as well.
A small car we certainly will get in the U.S. is the Focus ST, which Ford calls its "first global performance car," with its 247-hp EcoBoost engine that still provides the fuel economy you'd expect from a 2-liter four-cylinder engine. The yet smaller and more efficient Fiesta ST is just a concept, but one that looks production-ready.
Revealed for the first time is also the all-new Mercedes B-class, which goes on sale here in November and could also come to the U.S. soon. (It will almost certainly be available in Canada, where the current B-class is sold.) Mercedes says their new small car is substantially more agile and efficient, with a feature list that you'd expect from one of their luxury sedans. The B-class platform will also be adopted for their new, yet-smaller A-class that will debut in the coming two years.
Hyundai took the wraps off of its good-looking i30 hatchback, which will provide serious competition to the all-new Honda Civic here in Europe and might also show up in the U.S. as the Elantra Touring.
Also on display at Frankfurt is a slew of "urban mobility concepts" that combine the light weight and efficiency of a motorcycle with the all-weather capability and packaging of a car. Audi, Opel, and Volkswagen each showed various takes on this sub-1,000-pound vehicle segment, but none is immediately slated for production.volkwagen up
VERGE is Here
Other important news from Frankfurt ties directly to the GreenBiz VERGE concept. Mobility and information technologies continue to come together across vehicle makes and models:
Mercedes-Benz used a concept A-class (pictured at top) to pitch its vision of a system that centers around the driver's smartphone and integrates its features in a way that minimizes driver distraction while still enabling social media.
Ford's Chief Technical Officer, Paul Mascarenas, pitched the next-generation SYNC system, which takes a different approach, using instead "the cloud" for in-car connectivity, hinting that features such as a "smart alarm clock" that factors in weather and traffic and your planned commute could be available soon.
Many of the journalists at the show also experienced courtesy rides from a new car-sharing partnership between BMW and car-rental company Sixt. The overall concept is similar to Zipcar, but the key difference with DriveNow is the ability to retrieve the car at one station and drop it at another -- all made possible through a smartphone app. As with all car-sharing ventures, the potential is there to reduce the number of cars needed for a given population, with corresponding benefits in lower operating costs, congestion, and impacts from vehicle production through end-of-life.
Does It All Add Up?
Meeting the significant sustainability challenges for personal mobility will require a combination of engineering solutions like lightweighting, electric drive, and integrating technologies to improve the transportation system overall. There isn't a single silver-bullet solution.
Often overlooked, however, is driver demand. We need to want a reason to move from our bigger vehicles to smaller, more efficient ones. Fuel prices are one factor in that equation, but the desirability of smaller cars is another. The exhibition in Frankfurt shows that the smaller cars coming soon to Europe (and, in some cases, the U.S. as well) are very desirable indeed.
Photos courtesy of the Frankfurt Auto Show.

Friday, September 2, 2011

Amazon promises 7000 jobs, CA lawmakers not sold



Amazon proposes to bring 7000 new jobs to CA in exchange for dropping tax bill, lawmakers skeptical

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Amazon’s game of Chicken with California lawmakers just reached a stunning new height.  This week, the e-commerce leviathan proposed a compromise: it will open six new distribution centers capable of hiring as many as 7,000 full-time workers in California if the state agrees to drop the Internet sales tax law.  Will lawmakers bite?  It’s not looking good.
Addressing the issue at Sacramento’s Radisson hotel, Governor Jerry Brown did not shoot the proposal down altogether, but he made it clear that he’s not thrilled with the idea of giving up tax revenue in exchange for jobs, according to the Sacramento Bee.
"Look, we need more revenues unless we're going keep curbing schools, courts, corrections,” he said.
If passed, AB 155—also known as the “Amazon tax” bill—could potentially bring in an additional $200 million a year in tax revenue by forcing out-of-state online retailers to collect sales tax from California-based customers.  By contrast, Amazon’s proposal would bring 7,000 jobs to California over the course of the next four years.  But if the law passes, Amazon will cut ties with some 10,000 affiliates in California. 
The California Retailers Association counters that Amazon has already cost California 18,000 jobs and $7.1 billion in lost economic activity in 2010 alone, due to the company’s disregard for California sales tax.
"They might be adding seven [thousand jobs], but we're going to go out of business," Bill Dombrowski, head of the California Retailers Association, told the Sacramento Bee.
Interestingly, the California Retailers Association includes Wal-Mart, which was recently called into question for the fact that some of its own affiliates do not collect sales taxes on California transactions.  The LA Times found that CSN Stores of Boston has been selling hundreds of items on Walmart.com without collecting sales taxes, despite Wal-Mart’s very public efforts to get the Internet sales tax bill passed.  When questioned as to why it doesn’t collect sales taxes on California-based purchases on Walmart.com, Wal-Mart said that it is not responsible for collecting taxes; the responsibility falls on the Marketplace Retailer.
Since the tax bill brouhaha began back in July when it took effect, Amazon has funneled $5 million into an initiative to overturn the law by taking it to the voters.  California lawmakers have countered that effort by inserting an “urgency clause” into the bill to prevent it from going to the ballot box.