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Groupon promotes Raman to COO, considers buybacks

Kal Raman named Chief Operating Officer Groupon. | PhoCourtesy Business Wire

Kal Raman, named Chief Operating Officer, Groupon. | Photo Courtesy Business Wire

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Updated: December 19, 2012 11:59AM



Chicago daily deals site Groupon on Wednesday promoted sales executive Kal Raman to chief operating officer — a move some on Wall Street hope means the company has someone with CEO experience who could take over for founding chief executive Andrew Mason at some point.

Also on Wednesday, the company’s chief financial officer told analysts that the company, sitting on $1.2 billion in cash, could buy back shares.

Groupon’s stock gained 3.8 percent, or 10 cents, to $2.73 a share Wednesday. Shares dropped 30 percent last week, and continued their decline Monday and Tuesday. In all they are down 86.4 percent from the Chicago daily deal site’s initial public offering price of $20 a share on Nov. 4, 2011.

Raman is filling a position left vacant last year when Margo Georgiadis left after five months to return to Google. Georgiadis’ predecessor, Rob Solomon, stayed in the COO job for about one year before he left in March 2011.

Raman, who joined Groupon in April, will report to Mason.

Rumors have abounded that shareholders upset with Mason’s quirky personality and public antics are looking to Raman as the next potential Groupon CEO. Raman is a 20-year technology veteran, having worked as vice president of global fulfillment at eBay and before that as CEO of GlobalScholar, a software provider to elementary schools. He also was CEO at Drugstore.com and held senior positions at Amazon and Wal-Mart before joining Groupon as senior vice president for the Americas. In August, Groupon promoted Raman to senior vice president of global sales and operations.

Sameet Sinha, senior analyst, Internet, for B. Riley & Co. investment bank, said Wednesday that Mason, being “young and inexperienced, needs help” — especially now that Groupon is selling goods ranging from PCs to iPad covers.

“Kal is an operations guy” who has run companies and dealt with the fulfillment and warehousing issues that goods shipments require, Sinha said, referring to Raman’s executive roles at eBay and Amazon.

“If Andrew [Mason] isn’t able to bring a turnaround, Kal could be that person [to lead Groupon],” Sinha said.

In a statement, Mason said, “In a very short time, Kal has had a significant impact on increasing the number and quality of local businesses using the Groupon platform to the benefit of Groupon customers around the world.

“We are already seeing progress in Europe and Kal will be instrumental in leading our company as we deploy tools and technologies that will help us continue to grow both Groupon and the categories in which we operate,” Mason said.

Analyst Lou Kerner, manager of the Social Internet Fund, who has previously been critical of Mason, said Wednesday, “Mason has shown remarkably poor management, starting with turning down Google’s offer, to their mishandled IPO filings, to poorly integrated acquisitions.

“I have to believe this is his [Mason’s] last chance to bring order to the chaos that is Groupon, and the market is betting he fails,” Kerner said.

Earlier Wednesday, Groupon Chief Financial Officer Jason Child, speaking at a Morgan Stanley conference in Barcelona, Spain, said Groupon has generated positive cash flow in all but one quarter in its four-year history.

“We would look at a share buyback,” he said. “It’s something we’re not opposed to. But having that cash affords us a lot of flexibility. We will continue to review our options.”

Child said the latest quarterly financial report showed “payables,” or working capital benefits, amounted to $9 million of the $26 million in net cash flow.

“We expect it to continue to generate positive cash flow,” he said, noting that “cash isn’t necessary to fund the business.”



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