Groupon's loss was likely a result of having to take a smaller portion of revenue on daily deals over the holidays

Groupon's future looks bleak after reporting a fourth quarter loss and not-too-favorable expectations for the first quarter.

While Groupon's revenue rose 30 percent to $638.3 million in the fourth quarter from Q4 2011, it had a 1 cent per share loss. Analysts expected a profit of 3 cents per share.

Groupon's loss was likely a result of having to take a smaller portion of revenue on daily deals over the holidays. Merchants had complained that Groupon took too large of a cut on online offers. The company now predicts a long-term take rate of 30-40 percent on daily deals.

Groupon also shared a bit of its money with merchants in order to bring them onboard with the company.

Sacrificing revenue and profits is keeping merchants happy, but the future doesn't look any better for Groupon. For Q1 2013, the company predicts a revenue of $560 million to $610 million, which falls way below analyst estimates of $650 million.

Groupon's stock fell 26 percent to $4.43 in after hours trading. Since November 2011, Groupon has lost over three-quarters of its value.

On a related note, Andew Mason was fired from his position as Groupon CEO. Mason was in good humor about his misfortune, and wrote about it humorously:

(This is for Groupon employees, but I’m posting it publicly since it will leak anyway)

People of Groupon,

After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. If you’re wondering why… you haven’t been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I’m getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we’ve shared over the last few months, and I’ve never seen you working together more effectively as a global company – it’s time to give Groupon a relief valve from the public noise.

For those who are concerned about me, please don’t be – I love Groupon, and I’m terribly proud of what we’ve created. I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I’ll now take some time to decompress (FYI I’m looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I’ll figure out how to channel this experience into something productive.

If there’s one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don’t waste the opportunity!

I will miss you terribly.



Source: Reuters

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