Forbes writes: One of the most surprising findings in Amazon’s
recent quarterly earnings was its massive writedown of its investment in
LivingSocial, the number two company in the daily deals market, $169 out of an
initial $175 million investment. At
first, that sounds like a disaster. When you look into the details, it looks
like LivingSocial had to write down a lot of goodwill in its acquisitions (ie
restate the value of acquisitions on its balance sheet), and that itself is due
to the comparables LivingSocial uses to value those assets…..
Anyway, that’s not the point. The point is that LivingSocial
is now cheap to buy for Amazon. Even if LivingSocial’s business is foundering
(LivingSocial says it’s still growing), it still has very valuable assets ;
namely a huge opt-in email list, a big salesforce and relationships with
zillions of merchants.
And it’s key to remember the arcane reason why Amazon didn’t
buy LivingSocial outright in the first place: because until recently, Amazon
didn’t collect sales tax in US states where it didn’t have a physical presence.
Acquiring LivingSocial would have given it a presence in virtually every state.
But now Amazon has decided to collect sales tax in every state where it
operates (it has undertaken a giant warehouse buildout as a result). So that
barrier is gone. It can own LivingSocial outright. Heck, Amazon should also buy Groupon while
it’s at it. Groupon is clearly undervalued:…..
Read all about it at http://www.forbes.com/sites/pascalemmanuelgobry/2012/10/27/amazon-kindle-smartphone-daily-deals-livingsocial-groupon/
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