Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Oh the dreaded Friday afternoon press release – the place companies go to tell you things they hope you will forget by Monday! Groupon (GRPN) just dropped a nice anvil on investors with a restatement of the previous quarter by 4 cents lower and cites material weakness in its accounting. While this doesn’t affect current quarter estimates it’s one of those trust issues. This company already had a ton of push-pull with the SEC in their offering documents on how they wanted to report their financials. Looks like they are still working on it.
The stock was up over 3% in normal hours (nearly 7% at peak) and is now down 10%+ in after hours. Well maybe it will be “forgotten” by Monday (not).
- The revisions resulted in a reduction to fourth quarter 2011 revenue of $14.3 million. The revisions also resulted in an increase to fourth quarter operating expenses that reduced operating income by $30.0 million, net income by $22.6 million, and earnings per share by $0.04. Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not affected by the revisions.
- The revisions are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates. The revisions have an impact on both revenue and cost of revenue.
- In conjunction with the completion of the audit of Groupon’s financial statements for the year ended December 31, 2011 by its independent auditor, Ernst & Young LLP, the Company included a statement of a material weakness in its internal controls over its financial statement close process in its Annual Report on Form 10-K for year ended December31, 2011.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
