Marek Fuchs, the business media critic at TheStreet.com, writes that coverage of Groupon’s earnings on Monday missed the key point that its business growth is slowing.
Fuchs writes, “The Associated Press flailed about without touching upon the essential reason. It said that the weak European economy led less people to rush for services like ‘laser hair removal.’
“It also mentioned the cost of paying executives with stock and of acquiring customers, a Chinese joint venture and currency exchange rates, as well as a light forecast for the current quarter.
“In a quick-hit piece after the earnings release, Business Insider was almost comically mystified, saying: ‘Despite numbers that look okay on the surface, something problematic must be lurking below.’
“Uh, OK.
“But in a follow-up article, Business Insider offered up a concise explanation: Groupon’s core business is shrinking — and how — while growth is coming from a new division that features suspect accounting.
“It wrote this about the new division, called ‘Goods,’ which sells physical items: ‘Groupon recognizes revenue differently than in its core business. With some ‘Goods’ sales, Groupon is recognizing the total value of the item sold, not just the value that Groupon gets to keep after it sells a coupon.'”
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