Thursday, July 28, 2011

DotCom Bubble 2.0

This bubble seems to have a subtitle:  social media. But subtitle or not, it's becoming to look a lot like dotcom bubble 1.0: companies very much in the public eye but not making any money, in fact, losing a lot going public. The question for them becomes what numbers can I use to convince someone to buy my stock. I can't use profits because I have none. Some can't use revenue because they have little. And I certainly can't use losses because there are too many.

Groupon's solution is to use "adjusted consolidated segment operating income," or adjusted CSOI. You know what that is, right? It may even be used by one other company in the world. Using conventional numbers, Groupon lost $98,000,000 in the first quarter of this year. However, investors should really look at CSOI. Using this the company made $81,600,000 in that period. That's why they are asking investors for $20 billion to buy into their IPO.

It's a wonderful country. What was it that Barnum said? There's a sucker born every minute?

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