Sunday, June 9, 2013

DealBook: Groupon Files to Go Public

The social buying site Groupon filed on Thursday to go public with plans to raise an estimated $750 million in a highly anticipated debut that comes amid a frenzy for new technology companies like LinkedIn and Yandex.

Groupon, a Chicago-based start-up, has enjoyed a meteoric rise in its short life. Shortly after starting in 2008, Groupon notched revenue of $94 million. Two years later, it had swelled to $713 million.

The company reported $644.7 million of revenue in the first quarter of 2011 alone, with 83 million subscribers across 43 countries, according to its filing.

As its prospects have grown, so has investor interest.

Last year, the company was worth roughly $1.4 billion, based on a fund-raising round led by D.S.T. Global. Groupon spurned a $6 billion bid from Google in December. A month later, the start-up raised nearly $1 billion from large institutional investors like Fidelity Investments and T. Rowe Price. Groupon’s value was pegged at $25 billion just a couple of months ago, based on discussions for the initial public offering.

In a letter to prospective shareholders, Groupon’s chief executive, Andrew Mason, highlighted the company’s growth opportunity but cautioned investors to temper their expectations.

“In the past, we’ve made investments in growth that turned a healthy, forecasted quarterly profit into a sizable loss,” he said. “When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.”

Like many start-ups, Groupon is still struggling to turn a profit. Last year, the company’s loss topped $450 million, compared with $6.9 million in 2009 and $2.2 million in 2008.

It’s unclear when its fortunes will turn. The company warned, under the risk factors in its filing, that it had lost money since its inception and that it expected its operating expenses to grow for some time.

The company’s biggest expense is marketing. Groupon spent $263.2 million on online advertising, subscriber e-mails and the like, compared with just $4.5 million the year before.

“We cannot be certain that we will be able to attain or increase profitability on a quarterly or annual basis,” the filing said.

Groupon’s investors and early employees stand to reap a windfall in an I.P.O. The company’s largest shareholder, Eric P. Lefkofsky, a co-founder and board member, would be worth billions of dollars. Mr. Lefkofsky owns 64.1 million shares, or roughly 21.6 percent of the company’s Class A common stock. The venture capital firm, Accel Partners, which invested in Groupon in November 2009, owns a 5.6 percent stake. Mr. Mason, who made $180,000 for his base salary last year, controls 7.7 percent of the company.

Groupon, which will trade under the ticker “GRPN,” has hired Morgan Stanley, Goldman Sachs and Credit Suisse as lead underwriters for the offering.


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Wednesday, May 22, 2013

Despite Cutbacks, Night Court’s Small Dramas Go On

“Look at the bright side, it’s Oct. 27 in this year,” Judge Purificacion said, with a gallows-humor grin.

The New York State courts have taken a $170 million budget cut, and the small-claims courts in New York City are taking an especially big hit, with many night sessions eliminated, growing lines and increasing delays. But life does not stop, so the modest dramas of the small-claims courts are piling up: neighbor disputes, battles over bedbugs, and grudge matches that spill out into the hallways.

“I don’t know how long I’m going to be coming here,” Ms. Carter said, before she gets her day in court — or in this case, night in court.

Visiting the night small-claims court on Sutphin Boulevard in Jamaica offers a catalog of the irritations of city life, writ small. A livery-car driver was irate. Two former friends seemed about to spit. And Tashmina Muslima was dejected when her case against her former landlord was postponed until November, the next time an official Bengali interpreter would be available.

“I’m very surprised,” Ms. Muslima said outside Judge Purificacion’s courtroom, “because this is a very important place to come for justice.”

With court budgets cut in some 30 states, small-claims courts have been among the least noted casualties.

But some judges say cutbacks in “the people’s court” can be among the most painful because a small-claims case can keep a little annoyance (under $5,000 in New York) from growing into a big one. No lawyers are required, and night sessions make justice accessible to people who work.

But in some places across the nation, small-claims courts are a little smaller than they used to be because of state financial trouble. In Covelo, Calif., the court that handles small claims and other cases now meets once every other month, instead of once a month. In Clackamas County, Ore., night court for small claims has been eliminated.

In New York, budget reductions that went into effect in April mean that in four boroughs, night small-claims courts that once met four nights a week meet only on Thursday nights.

On Staten Island, night small-claims court meets only once a month.

In Queens, court officials have nearly doubled the list of cases facing the single night court judge every Thursday, to about 200. Even so, they project that newly filed small-claims cases are soon likely to have to wait until 2012 for their first court date, about four times the 45-day wait before the cutbacks. “It’s going to snowball,” said Charles S. Lopresto, the supervising judge in the Sutphin Boulevard courthouse.

By 7:30 on a recent Thursday night, Judge Purificacion was deep into the first of eight trials he would conduct that night. A home improvement contractor, it seemed, had promised a palatial bathroom. But, according to the homeowner, the contractor had arrived with “a vagrant, which is also a convict” as his helper, and when they left “the floor was down here and the bathroom was up here.”

The contractor’s argument had a certain elegant simplicity. “He’s lying in court,” he said. Judge Purificacion, who was a children’s book editor and writer before he was a lawyer, was economical in his use of time. Within minutes he was on to the next trial.

A decision would be in the mail, which is not how Judge Judy does it on television, but it has the advantage that people sometimes leave court calmly when emotions run high.

Judge Purificacion moved on to the case of the shared driveway, a suit by Jose A. Moncada against his neighbors in Ozone Park, Maria and Shawn Charles. Mr. Moncada claimed damage to a piece of his motorcycle, which he said the Charleses knocked over in the driveway.

He seemed to be waving the broken part in an envelope. But he did not get to unveil it. In short order, Judge Purificacion had both sides at his bench under the “In God We Trust” sign. He was putting numbers in an oversize calculator he uses to demonstrate the benefits of settlement. Soon, he had the neighbors agreeing that the Charleses would give Mr. Moncada $250 in three payments.

For the moment, peace seemed to reign.

By now, Judge Purificacion was grimacing in his chair because of a back twinge. He had heard cases all day before starting night court at 6:30.

But, onward: the case of the livery driver, Nurul Afsar, whose dispatcher said he had faked an accident. “That a lie,” Mr. Afsar testified.

The decision would be in the mail.

The bedbug trial was next. It was 10 p.m. But before the landlord’s lawyer, Patrick McGuire, could ask a single Perry Mason question of the tenant, Claudia Medina, there was shouting in the hall.

“He’s a bully!” someone screamed. “I want this man arrested!”

Court officers went running. In the hallway, Mr. Charles and Mr. Moncada, the neighbors with the shared driveway, were nose to nose. The spirit of amiable settlement was gone, despite what Judge Purificacion’s calculator had said. There was some pushing, and Mr. Moncada was hustled by the officers out onto Sutphin Boulevard, while Mr. Charles was told to stay put. They would be allowed to leave only separately.

Peace returned to the courthouse. But Mr. Charles said he and his neighbor were not likely to be friends. They had been in small-claims court before and were likely to be back, he said. .

Inside the courtroom, Mr. McGuire was cross-examining Ms. Medina on what he suggested was her unproven theory that bedbugs had infested her apartment in Kew Gardens as a result of inattention by the landlord. “There is,” he asked, knowing the answer in the almost empty courtroom, “no expert to testify as to the bedbug nature?”

She had not brought an expert, she conceded. It was 10:30, and the decision would be in the mail.

It was time for the case of the former friends. One wanted money for storing furniture for the other.

“Did you hear what she was saying under her breath?” the first one asked.

“I don’t want to see her,” said the other.

It was the last case Judge Purificacion had time for. There were 50 others ready that he had not gotten to.

When he sent the two former friends home at 11:15, he told them to leave the courthouse separately.


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