Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The Three Pillars of Groupon's Survival Strategy

By

It's not all about pizza coupons anymore. A forthcoming location-based mobile app, a move into direct sales, and a major acquisition put the company in a position to stay on top.

PrintPRINT
It can no longer claim to be the fastest-growing business ever, but Groupon (NASDAQ:GRPN) at least can brag that it survived the short-lived bubble for daily deals sites.

It may even have come up with a business plan that makes sense to investors.

It's not making money yet, but it's closer after the last quarter. It earned $0.02 per share before factoring in the costs of employee stock options and past acquisitions.

On the surface, the quarterly earnings announced Thursday after the close weren't that great. Sales rose 4.7% to $595.1 million, and net loss narrowed to $2.58 million. That fell short of the analyst consensus, compiled by Bloomberg, for sales of $615.7 million, though the loss was less than the expected $14.3 million.

Groupon's forecast for the fourth quarter is in line with expectations. It foresees revenue of $690 million to $740 million, and operating income of $40 million to $60 million. The analysts' estimate is $723.7 million in revenue, and profit of $46.1 million.

The initial reaction was negative, with the company's stock dropping 10% in after-hours trading before reversing direction to add 1.47%, ending up at $9.64 per share.

The whiplash may have been caused by the upbeat details that started filtering through on Groupon's latest quarter, and its intentions going forward.

First, the excuses, excuses for the shortfall in revenue: It's mostly Google's (NASDAQ:GOOG) fault. The company redesigned its Gmail, tucking promotions under a separate tab and thus reducing visibility for Groupon's daily emails to subscribers.

Mobile Apps

That explanation was made more palatable by the fact that Groupon is less dependent than it used to be on promotional emails. Increasingly, its people are accessing its offers via mobile apps, which have been downloaded by 60 million users. More than 40% of transactions are now completed on mobile devices, according to the company.

For the future, it has a location-based app in place, pointing to an enhanced ability to target consumers on the go with the right offers.

"We have to even further reduce our reliance on email and whatever happens with Gmail becomes less relevant," CEO Eric Lefkofsky told the Wall Street Journal on Thursday.
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE