COO Runs, Doesn't Walk, as Groupon Restates Revenue

Things come in threes, they say. The tech world has been awash with disasters, each one getting worse. First, Yahoo (YHOO) fired CEO Carol Bartz and a large shareholder wanted four directors to follow. Then HP (HPQ) fired CEO Léo Apotheker and hired Meg Whitman, making some speculate that HP was beyond redemption, largely because of its board.

Number three? Groupon, an accounting challenged company if ever there was one, just had to restate its revenues on its S-1 -- making lord knows how many do-overs -- and then said goodbye to COO Margo Georgiadis, who lasted all of five months. She's heading back to where she came from, Google (GOOG). And probably kissing the ground and weeping for joy. The wonder is why someone with her pedigree had to leave when clearly it should have been CEO Andrew Mason and the board that departed.

It's the new kind of profit
When Groupon first had to show figures after a lot of pre-scrutiny bluster, a lot of jaws among press and analysts dropped. This was a company that had never seen an expense it didn't like. It bled barrels of red ink, after claiming it was profitable. Ooops. Scratch that.

Groupon has had to amend its S-1 a number of times. On more than one occasion, it was to make the SEC happy. For some reason, regulators never warmed to a company that practically invented its own form of accounting to make financial slop look like haute cuisine.

This is not the sort of story that plays well with investors, and Groupon is quickly burning cash. Its customers are burning out, buying into fewer and fewer deals per customer as time goes by. The company couldn't sustain its rate of spending. Management really needed an IPO. But things looked bad. Who knew when it could pull that off?

Quick -- what do we say now?
So Mason wrote a memo to the troops, defending the company, talking up its prospects, and basically saying that none of the critics had any idea what they were talking about. Funny how it got leaked to the press and got a lot of play where potential investors might see it.

Bada-big -- Groupon was back on track to the money trough. And now? Restating revenues, pegging close to what I've been calling net revenue -- gross revenue less the significant portion that went to the merchants who actually offered the deals -- and which Groupon liked to call "gross profits." Want to see gross? Click on the following two snapshots of the company's S-1 filings, before and after restating:

This is an adjustment that should have been made long ago. Trying to pretend that the company actually had a claim on the money owed to the merchants was just absurd.

Ran as fast as she could
The official word is that Google asked Georgiadis to rejoin the company. Maybe that's so, but I'd bet hard money that, if true, she suddenly knew that guardian angels existed. Because someone had just dragged her out of a career quicksand pool.

It's a shame that Georgiadis had to leave. Groupon is in enormous trouble. Like Yahoo and HP, it's because of the people at the top. Unfortunately, they're not going anywhere, and the only place that Groupon will probably go is straight down the tubes.

Related:

• Groupon Is Back on the IPO Track to Hit the Cash Trough
• Volatility in Management, not Markets, Gets Groupon to Hold Its IPO
• Wait a Second -- Facebook Actually Missed Its Revenue Projections by $500M
• Groupon Might Be Fine, If Only Its Customers Weren't Burning Out
• What Groupon's CEO Didn't Tell His Employees in That Memo
• Groupon Tries to Make the SEC Happy, but Loses More Than Ever

Image: Flickr user cogdogblog, CC 2.0. Erik Sherman

Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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