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Groupon is wearing out investors' patience

Groupon (GRPN) had what should have been a Wall Street win when it announced its fourth-quarter and full 2013 results after markets closed Thursday. Quarterly revenue of $768.4 million and earnings per share of 4 cents (excluding stock compensation, acquisition costs and impairment of an investment in China) beat analyst expectations of $720.5 million in revenue and 2 cents a share.

The stock took an immediate jump, but then plummeted by more than 12 percent before the markets opened this morning. What caused the turnaround and drop was strong investor disappointment in Groupon's guidance for the current quarter.

Earnings will take a major hit because of acquisitions and other investments. Groupon forecasts revenue to be between $710 million and $760 million -- a seasonal drop from last quarter -- but earnings will be a loss of between 2 cents and 4 cents per share before one-time expenses. Analysts had expected 6 cents per share profit on $668.7 million in revenue. Groupon will bring in more money, but it will lose much more than anticipated.

Since before it went public, Groupon has been a story of promise to be fulfilled sometime in the future. Company officers claimed profitability before filing for the IPO. Then it became clear that profit was non-GAAP, referring to the U.S. accounting standards. Groupon burned through cash like a pile of leaves in autumn. But the idea was to ramp up so massively that eventually the enormous marketing spending would drop, leaving lush profits for investors.

However, Groupon has seen annual losses for the last five years. Income from operations in 2013 was down 23 percent from 2012, even as revenue climbed by 9 percent year-over-year, the wrong direction for a company looking to find its way into the black.

Furthermore, Groupon still has to temper all its reports with its own accounting definitions because the one-time expenses of such items as stock compensation and acquisition costs keep happening. Although the definitions may help company management better see whether changes over time have improved the underlying business model, investors eventually want to see headway toward actual profits.

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