LivingSocial to Post Third Quarter Loss on Writedown
LivingSocial Inc. had a net loss of about $566 million in the the third quarter, because of an impairment charge on acquisitions, Chief Executive Officer Tim O’Shaughnessy told staff in a memo.
Sales at the daily-deal website were about $124 million in the quarter, almost double revenue from a year earlier, O’Shaughnessy wrote today in a note, which was obtained by Bloomberg. The company took a charge of $496 million on some acquisitions made in the past year because they dropped in value, the CEO said.
“We had to revalue some of the companies we acquired last year,” O’Shaughnessy wrote. “As you know, the market has also dropped over that same time for similar public tech companies.”
LivingSocial, based in Washington, is grappling with cooling demand for online coupons and competition from Google Inc. (GOOG) and Amazon.com Inc. (AMZN) Groupon Inc. (GRPN), the daily-deal leader, has lost 78 percent of its value since holding an initial public offering last November.
O’Shaughnessy sent the memo to staff today after Amazon, a backer of LivingSocial, reported a $274 million net loss in the most recent quarter in part because of its investment in the site. Amazon is expected to report more detailed financials about its LivingSocial stake tomorrow, O’Shaughnessy said.
Maire Griffin, a spokeswoman for LivingSocial, declined to comment on the memo.
The coupon site had positive operating cash flow during September, a first for the company, according to O’Shaughnessy.
“We ended the last month of the quarter with more money in the bank than we had at the beginning of the month, marking an important milestone on our path to profitability and long-term success,” he wrote.
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