Never mind its IPO, Groupon itself may be doomed

Online deal site slashes reported revenue in half, second COO departs since March

At this point, if Groupon offered shares of the company as an online daily deal, I'm not sure there would be any takers.

That's a slight exaggeration -- the world is full of suckers, after all -- but the truth is that Groupon's plans for an initial public offering are melting before our eyes.

Last Friday the company, bowing to pressure from a skeptical Securities and Exchange Commission, slashed by 50% its reported revenue. The Chicago-based company also announced that Chief Operating Officer Margo Georgiadis, hired away from Google in April, was returning to the search giant.

Let's talk about the revenue first. Groupon splits revenue with the merchants who sign on to advertise daily deals. OK so far. But the company had been counting all of the revenue generated for itself, even though it keeps only half of it.

It's a ridiculously transparent and dishonest way to keep the books, and the SEC jumped on it soon after Groupon filed for an IPO in early June that it hoped would raise up to $750 million.

The drama extended through the summer, punctuated by withering skepticism from financial analysts, damage control involving potential violations of the SEC's "quiet period" for IPOs by Groupon's co-founder, a clear violation of the quiet period by CEO Andrew Mason, questions about the viability of the entire online daily-deals market, cancellation of a pre-IPO road show and the delay of the initial public offering itself.

It's hard to screw up an IPO much more than that. Groupon really should change its proposed ticker symbol from GRPN to DEAD to more accurately convey the status of its public offering.

Meanwhile, the departure of Georgiadis marks the second time since March that a COO has left Groupon, voluntarily or otherwise. Former Yahoo executive Rob Solomon quit or was fired in March after only a year on the job.

Georgiadis lasted less than half that time, issuing a laughable statement in a blog post by Mason in which she said, "Groupon is a great company and I feel privileged to have worked there even for a short time. 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."

Happy, Andrew? Now can I get my severance?

Citing "one person familiar with the situation," the Wall Street Journal reported that "Georgiadis didn't fit in at Groupon. Mr. Mason would often go around her to other executives, a move that frustrated Ms. Georgiadis, added the person."

Assuming that's true, how dysfunctional is a company when the CEO goes around the No. 2 person? And how can a company that now has a COO revolving door be taken seriously by investors?

Given Groupon's train-wreck of an IPO, unprofessional management, and -- last but not least -- continuing losses, you have to wonder not whether the company will survive, but for how long.

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