advertisement

Groupon hires advisers to find partners for Asia businesses

Chicago-based Groupon Inc. is seeking partners for its operations in Asia, after projecting fourth-quarter results that trailed analysts' estimates.

The company said it hired advisers to evaluate financial and strategic options that could unlock shareholder value, citing the growth opportunities for South Korea's Ticket Monster and the rest of its Asian operations. Chief Executive Officer Eric Lefkofsky said the company is focused on finding partners instead of selling some of the businesses completely.

"We are starting to evaluate what we should be doing in those emerging markets," Lefkofsky said yesterday in a phone interview. "There are certain countries where we'd benefit from a partner."

Groupon forecast fourth-quarter earnings of as much as 4 cents a share, excluding some items, saying that "significant movement" in foreign-exchange rates is limiting profit. Analysts were expecting 7 cents a share on average.

The company, which started out by sending daily-deal e- mails, is investing in becoming a full-blown e-commerce site. Lefkofsky is trying to take on the likes of Amazon.com Inc. by transforming Groupon into a website offering thousands of discounts. While Chicago-based Groupon has been adding new features like a grocery loyalty program and listings of local businesses, customers had been slow to embrace the company's shift.

"We largely delivered on all our objectives," Lefkofsky said. "I think people will say Groupon has been largely turned around now."

Profit Beat

Groupon reported third-quarter earnings of 3 cent a share, excluding some items, which beat the 1-cent average estimate among analysts. It also topped the company's own forecast for break-even to 2 cents a share. Sales rose 27 percent to $757.1 million in the quarter, exceeding the $749 million average estimate.

The shares rose 4.3 percent to $6.25 at 7:34 p.m. yesterday in New York.

Revenue categorized as "rest of the world" -- which is everything outside the U.S., Europe, the Middle East and Africa -- rose 26 percent to $108.5 million in the third quarter, accounting for 14 percent of total sales. Customer purchases in those countries rose 155 percent.

Groupon agreed to buy e-commerce marketplace Ticket Monster in South Korea less than a year ago for $260 million. On a conference call yesterday with analysts, Groupon specified that it isn't looking to sell all of Ticket Monster.

"We'd like to be involved with these businesses for a long time, so we are not looking to sell some of these businesses completely," Lefkofsky said. "Korea is the fifth-largest e- commerce market in the world."

Groupon's third-quarter net loss widened to $21.2 million from $2.56 million a year ago.

To accelerate growth, Groupon introduced a number of new features in the last few months. It introduced Pages -- more than 7 million listings of merchants, complete with their business hours, links to their websites, ratings and helpful tips from customers.

Groupon also updated its iPhone app to include Apple Pay, which lets app users make payments by scanning their fingerprints. Another mobile feature, Snap by Groupon, is a free app that pays people cash for buying select grocery and other items every week from any retailer in the U.S. and Canada.

"They've done a lot of investment to try to turn around their business," Edward Woo, an analyst at Ascendiant Capital Group LLC, said before the results were released.

On the flip side, Groupon has seen its share of executive departures lately. The head of product, Parker Barrile, left this month, the company said. Another executive, Jeff Holden, left Groupon for Uber earlier this year.

"The senior leadership team at Groupon is remarkably stable and strong," Lefkofsky said. Barrile "was only here three weeks. He left for personal reasons, and this has nothing to do with Groupon and the state of the company."

Lefkofsky said he's evaluating whether to fill Barrile's position.

Groupon will host its first analyst day on Nov. 11 in Chicago.

"My hope is that they'll sit everyone down and walk through their different initiatives and discuss the potential impact on their top and bottom line," Tom Forte, an analyst at Brean Capital LLC, said in an interview before the earnings results were announced. "The investors will realize that the company is a lot more than the daily deals."

To contact the reporter on this story: Olga Kharif in Portland at okharifbloomberg.net To contact the editors responsible for this story: Sarah Rabil at srabilbloomberg.net James Callan, Stephen West

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.