Proactive Investors USA & CanadaRalph Lauren sees lower wholesale sales this yearReuters* Q4 EPS 99 cents vs Street view 84 cents * Sees FY revenue up but wholesale sales down * Shares fall 3.8 pct in premarket trade May 22 (Reuters) – Ralph Lauren Cor…
Medtronic posts higher quarterly earningsReuters* Sees FY EPS $3.62-$3.70; Wall St view $3.66 * Shares up 2.3 percent May 22 (Reuters) – Medtronic Inc reported higher quarterly earnings on Tuesday as stronger sales in its cardiovascular, diabetes and o…
Is Groupon the next Enron? … No. It’s worse.
Before the company even went public, there were signs that internal financial controls weren’t up to snuff.
Now I’m hearing refrains of “three blind mice” as “defrauded” investors line up to have their day in court. You might as well say the “dog ate my homework.” It’s not like no one knew this was coming. The U.S. Securities and Exchange Commission (SEC) made management redo Groupon’s financial statements and accounting practices not once, but twice before the company’s January 2011 initial public offering (IPO).
The first time involved including the cost of marketing in operating income – duh. The second was to force the company to deduct merchant payments from revenues – double duh!
Both are basic accounting principles.
If you spent $2 to gain $1 in orders you have to report that as a $1 loss if you’re dealing with cold, hard cash. Also, if you have $1 in merchant payments, you can’t count that as $2 in revenues, unless apparently you work at Groupon and love accrual accounting.
It’s not like Groupon execs can claim they didn’t know.
It’s abundantly clear to me that the “company” has very little, if any, understanding of REG FD and securities litigation.
(REG FD, in case you are not familiar with it, is short for Regulation Fair Disclosure which the SEC adopted Aug. 15, 2000. REG FD is intended to eliminate selective disclosure of material non-public information.)
But I have a hunch they’re going to find out the hard way.
Groupon’s “Material Weakness”
When the SEC came knocking again on April 2nd the company was forced to restate its Q4 financials. That summarily reduced Groupon’s revenue by $14 million and profits – assuming there were any to begin with – by $22.6 million.
In an official statement, Ernst & Young, the company’s primary auditor, noted “material weakness” with regard to the company’s internal controls. Investors simply noted that they’d better get going while the going was good.
Groupon’s share price tumbled 16.87% Monday alone and is down 55% from its peak.
Q4 and Year-End 2011 U.S. Foreclosure Sales Shifting Toward Short Sales http://bit.ly/A5qKrP
June 9, 2011 Special Update
Note from Doug: The latest Z.1 Flow of Funds, data through Q1, was released today at 12 PM EST. The balance sheet data on which Q is calculated have undergone very substantial revisions. I’ll post a separate commentar…
May 20, 2011 weekly update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined to 5.3 from last week’s 6.4. This is the fourth consecutive week of decline from the 11-month interim high of 7.8 for the week endi…
May 13, 2011 weekly update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined to 6.4 from last week’s 6.6. This is the third week of fractional decline from the 11-month interim high of 7.7 for the week ending…
May 6, 2011 weekly update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined to 6.7 from last week’s 7.5. This is the second week of fractional decline from the 11-month interim high of 7.7 for the week ending…
May 2, 2011 monthly update
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It’s a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the m…
April 29, 2011 weekly update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined fractionally to 7.5 from last week’s eleven-month high of 7.7.
The Published Record
The published ECRI WLI growth metric h…