RUMOR: GROUPON SHORT ON CASH

In the run up to its recent IPO, a number of outlets reported that the daily deal giant Groupon was running short on cash. Over at the Motley Fool, Evan Niu noted that the company had $243.9 million in cash and equivalents at the end of September, compared with $465.6 million in accrued merchant payables, that is, the money they owed people who ran Groupon deals.

The company ended up raising $700 million, but according to a source familiar with its business, there still isn’t enough cash on hand to make critical structural improvements the company needs to grow. Groupon is shelling out millions every month on hosting costs, and paying a premium to third parties. The company is very eager to construct it own data center, but simply can’t afford it.

Groupon noted in it's IPO prospectus "We have spent and expect to continue to spend substantial amounts on data centers and equipment and related network infrastructure to handle the traffic on our websites and applications. The operation of these systems is expensive and complex and could result in operational failures. In the event that our subscriber base or the amount of traffic on our websites and applications grows more quickly than anticipated, we may be required to incur significant additional costs.”

WORST COMPANIES IN AMERICA

24/7 Wallstreet has compiled a list of the worst run companies in America. It used a number of factors to evaluate the companies including stock price, dividends paid, product launch success, financial results, success of new management and the performance of each company within its industry. Not surprisingly a number of technology oriented companies made the list.

Research in Motion (RIM) came in at #2 on the list. It's delay in releasing competitive products and poorly designed products with the inability to compete against Apple and Android were sited as two of the main reasons.

At #4 on the list is Eastman Kodak. With the inability to transition from an operating company to a patent holder with intellectual property to license investors are very skittish on the company. It's stock price is down 79% YTD and many investors are suing the company for misleading them about how much capital it had on hand.

In the 7-9 spots are Hewlett-Packard, Groupon and Netflix respectively. HP has lost up to 22% of it's stock price with the main concern around the ability to find a successful successor to Mark Hurd. Groupon has never made a profit and there are concerns about it's accounting practices. Rounding out the list is Netflix. It makes the list mainly due to the debacle this summer where the company raised rates on customers 60%. It lost over 800,000 customers according to it's most recent filing.

To read the rest of the list and see who was in the best companies catagory, hit the link above.

GROUPON & LIVING SOCIAL CAUGHT INFLATING PRICES TO SHOW BIGGER DISCOUNT

Groupon and LivingSocial succeed because consumers perceive them as great deals. But is that true?

Thumbtack.com called 10 vendors offering daily deals (five from Groupon and five from LivingSocial) and found eight instances where they were quoted a price over the phone that was cheaper than the advertised regular price being offered. All five of Groupon's prices were higher than the same merchant's price when called, and three of the LivingSocial ones were.

Some of the most egregious examples from the Thumbtack.com post:

• On August 24, 2011, Groupon offered carpet cleaning for a 200 sq. ft. room in San Francisco for $45, a discount of 78% from the regular price of $200. The price we were quoted? $160 for 300 sq. ft. of carpet cleaning, or $0.53 per sq. ft. At $0.53 per sq. ft., the cleaning for a 200 sq. ft room would cost $106.
• On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix for $49, a discount of 67% from the regular price of $150.  The non-discounted price for the cleaning advertised by Groupon? $150. The price we were quoted for two hours of home cleaning? $80.

MICROSOFT LAUNCHES BING DEALS

Microsoft announced and launched a new deals website on Friday tied to its growing Bing suite of services. Bing Deals is a shopping site that compiles specials from GroupOn, Target, LivingSocial, Nordstrom and others. “Instead of building another program, we’re harnessing deals from major providers and retailers,” said Bing senior director Lisa Gurry. Microsoft’s Bing Deals offers more than 200,000 specials across the United States and, as a deal aggregator, it should eliminate the need to sign up for email alerts from multiple coupon-based services. Just like competing options, Microsoft will offer daily specials that will be accessible from its desktop website located at http://bing.com/deals and from mobile devices.

GROUPON SUED BY STAFF

After persistent rumors this week that Groupon was shelving its IPO due to investor and user dissatisfaction, more bad news has struck. In a filing in Chicago federal court this week, former salesperson Ranita Dailey confirmed she will be lead plaintiff on behalf of Groupon employees who seek to recoup overtime that the company allegedly failed to pay. The suit claims that Groupon violated federal and state labor law, and demands three years of back wages and punitive damages for hundreds of employees. Groupon has not commented on the lawsuit.

GROUPON IPO ON HOLD

Groupon, which is expected to fetch a $20 billion valuation upon its stock-market debut, canceled its investor roadshow and is reevaluating plans for an initial public offering in the face of stock-market volatility, said a person familiar with the matter. While the Chicago company isn't pulling its IPO, it is reassessing its timing on a week by week basis, this person added.

Groupon had originally been aiming to go public after Labor Day and to price its shares in mid-September, this person said. The roadshow had been planned for next week. A Groupon spokesman declined to comment.

FACEBOOK SHELVES "FACEBOOK DEALS"

Facebook has decided to shelve its Facebook Deals product, a service that was launched to compete with other coupon service providers such as Groupon and LivingSocial. “After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” Facebook told Reuters. “We think there is a lot of power in a social approach to driving people into local businesses. We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.” Facebook will instead focus on Pages, Sponsored Stories and its Ads product. Facebook announced Deals in November and began testing the service in Atlanta, Austin, Dallas, San Diego and San Francisco. It partnered with aDealio, Gilt City, HomeRun, kgb deals, OpenTable, Plum District, PopSugar City, ReachLocal, Tippr, viagogo and zozi to power the service.

LEAK: NOKIA PERKS TO TAKE ON GROUPON, LIVINGSOCIAL, ETC.

If you're looking to score deals and discounts online you've got plenty of choices -- Groupon, LivingSocial, GiltCity, Google Offers -- and yet, Nokia seems to think the world needs one more such service. The sleuths over at ZOMGitsCj spotted a video on Vimeo from the struggling handset maker (since removed) introducing Nokia Perks. The premise is pretty simple -- pop over to perks.nokia.com (currently offline), browse for deals and coupons, and click save on any you care to cash in. The discounts you pick are automatically sent to your phone and, just like Groupon, all you need to do is show the barcode to the register jockey. As a nice added touch, Perks also pops up directions to the store in the mapping app.

GROUPON FILES $750 MILLION IPO WITH SEC

On Thursday, Groupon, the popular location-based coupon service, filed for an initial public offering with the Securities and Exchange Commission. The start-up, which alerts 83 million email subscribers in 43 different countries of local deals that range from restaurant discounts to sailing lessons, hopes to raise $750 million in its IPO. “Expect us to make ambitious bets on our future that distract us from our current business,” Andrew Mason, Groupon’s chief executive officer, said in a statement. “Some bets we’ll get right, and others we’ll get wrong, but we think it’s the only way to continuously build disruptive products,” Mason added.

Groupon launched in November, 2007, has more than 7,000 employees, and reported $645 million in revenues during Q1 2011, however they have never made a profit.

AT&T LAUNCHES GROUPON COMPETITOR

Yellow Pages, a subsidiary of AT&T, is launching its own Deals platform that will compete with Groupon and other bargain services, Bloomberg is reporting. The service is live now on YellowPages.com, and AT&T is offering new customers a $10 credit towards their first “Deal of the Day” purchase, provided that you sign up before May 22nd.

The carrier says that its Yellow Pages Deals service will be available in Atlanta, Dallas/Forth Worth, and Los Angeles to start, although it will be deployed to more cities in the future. AT&T could have the upper hand among mobile users, as it typically installs a default Yellow Pages application on most of its phones. However, it’s unclear if it will build the Deals service directly into mobile apps, or if it will only be an online/e-mail offering.

BING TO TAKE ON GROUPON AND LIVINGSOCIAL

Microsoft's Bing has announced it will be launching Bing Daily Deals. Microsoft will be partnering with Dealmap to bring 200,000 deals from 14,000 cities throughout the United States to Bing's desktop and mobile versions.

On the mobile version of Bing, Bing Deals will be accessed through a dedicated “Deals” tab, while on the desktop, deals will be presented as a regular part of search results.

Unfortunately, you can’t specify the types of deals you’d like to receive, since all deals are based strictly upon location. However, what you lack in specificity, you make up for in volume, since Dealmap — upon which Bing Deals is based — is a huge aggregator of deals from other sites.

GROUPON RESPONDS TO SUPER BOWL AD CONTROVERSY

Groupon sure did make a splash at the game, but from all the post-Super Bowl buzz, it's clear the company stumbled in creating the right impression for the brand. One of the spots, which many found borderline offensive, seemed to trivialize the political struggle currently going on in Tibet. In a blog post today, CEO Andrew Mason responded to the controversy, and, in doing so, may have revealed the culprit behind the ad: Crispin Porter + Bogusky.

Except, Alex Bogusky, the so-called Ad Jesus behind the very Hulu-Alec Baldwin Super Bowl spot Mason cites in his explanation, famously quit the ad biz months ago. (Let's hope Groupon got at least 33.3% off on the deal.)

Though Mason took responsibilty for the spot, explaining that trivializing Tibet's cause was never Groupon's intention, the company's founder was clear about who came up with the idea for the commercial:

The firm that conceived the ad, Crispin Porter & Bogusky, strives to draw attention to the cultural tensions created by brands. When they created this Hulu ad, they highlighted the idea that TV rots your brain, making fun of Hulu. Our ads highlight the often trivial nature of stuff on Groupon when juxtaposed against bigger world issues, making fun of Groupon. Why make fun of ourselves? Because it's different—ads are traditionally about shameless self promotion, and we've always strived to have a more honest and respectful conversation with our customers. We would never have run these ads if we thought they trivialized the causes – even if we didn't take them as seriously as we do, what type of company would go out of their way to be so antagonistic?

GOOGLE READYING GROUPON COMPETITOR

Just a month after being rebuffed in a buyout offer of Groupon, Google is preparing to launch its own social-buying competitor called Google Offers.

The venture "is a new product to help potential customers and clientele find great deals in their area through a daily email," according to a fact sheet first published by Mashable.
A Google spokesperson confirmed that the Internet giant was actively recruiting businesses for a daily-deals offering.

"Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program," the company said in a statement. "This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted."

The social-buying model offers a "deal of the day" to users, usually at a significant discount on a sought-after product or service in their city or town. Google is interested because deals are geared around specifically targeted local markets, which is seen as a big source of future Internet advertising growth.

Google did not indicate when it expected to launch, but it is playing catch up in the sector after reportedly trying to buy market leader Groupon for as much as $6 billion before being rebuffed last month. Groupon, which is rumored to be doing $2 billion a year in revenue, has since increased its muscle by raising $950 million in financing, giving it a valuation of about $6.4 billion.

In addition to Groupon, Google will have to contend with a host of "Groupon clones," including Amazon.com-backed LivingSocial, which recently made headlines and fans by selling more than a million $20 Amazon gift cards for $10 each. LivingSocial said last month it is "currently booking revenues of more than $1 million a day on average and is projected to book well over $500 million in revenue in 2011."

GOOGLE LOOKING FOR GROUPON CLONE TO BUY

When it comes to the online coupon space, Google wants in. The Internet giant wants in so badly, it was willing to pay $6 billion for the current market leader, Groupon. The huge offer was actually pretty fair considering Groupon’s reported $1 billion in annual revenue, but the deal died on the table and now Google is left searching for other ways to enter the space. According to a report from the New York Post on Tuesday, the company is doing just that — Google is currently on the prowl for a “Groupon wannabe” to snatch up so it can compete with the company that rejected its advances. Google tends to get what it wants, so an acquisition is bound to happen soon — and that’s good news for consumers. Stiffer competition means more deals, and thus more savings for users of these trendy new local deal vendors. [BGR]

WHAT KILLED THE GOOGLE GROUPON DEAL?

A source close to Groupon board members said that anti-trust concerns ultimately forced Groupon to turn down Google's $6 billion offer. This source says the view on Groupon's board was that a Google-Groupon merger would draw more regulatory scrutiny than any other deal Google has ever done.

Google is currently undergoing two anti-trust investigations – one from Europe and another over the ITA deal. Google also went through severe regulatory trauma acquiring DoubleClick and AdMob. Anti-trust heat halted Google's move to take over Yahoo's search business.

Because of this view – that Google-Groupon might not be allowed to go through and that it would take months and months to find out the bad news – board members decided they would need a significant break-up fee if they were to accept Google's offer.

The source says the board wanted a break-up fee akin to the one Google gave DoubleClick. A source close to DoubleClick's executive team at the time of that merger tells us the company "got significant protection." In agreeing to acquire AdMob for $750 million, Google also agreed to a $700 million kill fee. Google balked and would not agree to it.

This made the choice easy for Groupon's board, and they walked away from the deal. There was too much risk involved to take a deal that would only pay a 3X multiple on the $2 billion run-rate Groupon started seeing in November and December. [MSNBC]

RUMOR: GOOGLE SNATCHES UP GROUPON OR ARE THEY COMPETING FOR A 3RD?

Rumors of a Google Groupon acquisition are circling through the blogosphere and for good reason. Groupon CEO Andrew Mason’s Twitter account does reveal some interesting activity, namely a vaguely implicit conversation had with Google M&A lead Neeraj Arora back in September.

The exchange doesn't mean that Google acquired Groupon two months ago, however it’s interesting to note that the ongoing dialogue between the companies has been public since then. Mason’s end statement “thanks – gotta leave some for the rest of us :-)” alludes to Google and Groupon possibly going after the same third party company, with Groupon in the lead. This is also around the same time that a rumored Yahoo deal fell apart. [TechCrunch]