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Friday, March 30, 2012

Groupon restates Q4 earnings and drops 6% after hours

(Crain's) — Groupon Inc. restated its fourth-quarter earnings today and disclosed in its annual report that auditors issued a statement that the company had material weakness in its internal controls.

The company said the revisions didn't change its cash flow.

Groupon's stock fell $1.23, or 6.7 percent, to $17.15 in after-hours trading.

It said the revision, which reduced fourth-quarter operating income by $30 million, was caused by the need for higher reserves for deals with higher prices that have higher refund rates than its typical daily deals.

Groupon now says it lost $65.4 million in the fourth quarter, compared with its original loss of $42.7 million. Its loss from operations was unchanged at $15 million.

"We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants," said Jason Child, Chicago-based Groupon's chief financial officer.

Groupon also issued a first-quarter forecast for revenue of $510 million to $550 million, slightly below analyst forecasts of $526 million to $550 million. The company expects income from operations of $15 million to $35 million.

Today's restatement is the latest accounting problem for Groupon, which had to revise its financials during the runup to its IPO last fall.

The company's use of an unconventional profit measure and an aggressive definition of accounting for revenue — including the amount of its daily deals shared with merchants — drew fire from the Securities and Exchange Commission and were changed before the company went public.

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