In a letter to Groupon employees, ousted CEO Andrew Mason wrote, "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."
Or you didn't read our previous Trading Shots from November 2012, "Why Groupon Should Fire Its CEO."
As Mr. Mason himself said in yesterday's letter, "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 can read the full letter here.
Mr. Mason should be given credit for honesty and self-awareness. The board should be given credit for making the change, albeit a bit late.
The question for investors now, however, is whether anyone can fix Groupon? The answer is probably no.
Groupon's plan involves creating a two-person office of the chief executive; one of the two new heads is executive chairman Eric Lefkofsky. Investors should read this 2011 article from Fortune on Mr. Lefkofsky's history titled "The checkered history of Groupon's chairman."
Checkered history or not, the problems lie in the business. Increasingly, Mr. Mason's brainstorm of daily Internet-based couponing is looking like a fad.
Its core Groupon voucher business, which the company calls "third party revenue," fell nearly 14 per cent in 2012's fourth quarter, compared to the prior-year period.
Its newer "Groupon Goods" business, with profit margins markedly smaller than the coupons, provided the company's revenue growth.
Wednesday's earnings release also noted that cash flow was falling sharply and the company expected revenue and profit figures for the first quarter that are well below analyst expectations.
The market sent Groupon shares down more than 25 per cent, and if any board members still had sympathies to retain Mr. Mason, they were likely extinguished.
Who could see all of this misery coming? Plenty of people, including me.
In March, 2011.
In Nov., 2011.
And again, as mentioned, last November.
The fact that the doomsayers got this right suggests the company was fundamentally flawed from the beginning, and remains irreparably flawed today. Mr. Mason had a wonderful idea, but he has now gone from rising star, to shooting star that flamed out. His company will also likely vaporize.
READERS: Is Groupon more or less likely to fail with Mr. Mason gone?