A Microsoft spokesperson, however, said Motorola is prohibited from acting on the court’s decision because a U.S. court granted Microsoft a restraining order on April 11 to prevent Motorola Mobility from taking action based on the Mannheim court’s ruling.

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“We see strong momentum for our flagship in-memory platform SAP HANA, our cloud and mobile solutions, and our core applications and analytics products,” SAP Co-Chief Executives Bill McDermott and Jim Hagemann Snabe said.

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Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

Too bad it’s essentially the same injunction.

The Mannheim regional court today ruled against Apple in another case brought against it by Motorola, banning push email notifications from the company’s email services in Germany, something it already did back in February against another Apple entity.

It also ordered the company to pay Motorola Mobility damages for violating its patents, though an amount hasn’t yet been specified (as far as I can tell).

Apple, of course, contends that the ruling is invalid. In a statement given to AllThingsD it said:

“This is the same case Motorola already brought against another Apple entity and the court’s decision does not impact product availability. Our customers in Germany should have no problem finding the iPad or iPhone they want. However, we disagree with the court’s decision and plan to appeal the ruling.”

And there’s really not much else for it to do. Apple already implemented the changes to iCloud and MobileMe to comply with the earlier ruling, so it’s de facto in compliance with this one. Now, it can only wait to see how the standard-essential patent side of this argument plays out. But on that front, Apple has an advantage, as a German court has already said MoMo should accept its licensing offer. “Motorola would breach its obligations under antitrust law if it continued to demand that Apple cease and desist from the sale of the iPhone and the iPad,” the court said.

Judge Andreas Voss of the Mannheim Regional Court this morning threw out two lawsuits in the case — one that Apple brought against Samsung, and another that Samsung brought against Apple. The former involved Apple’s claim that Samsung infringed on its slide-to-lock patent; the latter, Samsung’s claim that Apple has violated one of its 3G/UMTS-essential patents.

Samsung vowed to appeal the dismissal of its lawsuit against Apple, and noted that a separate case regarding four alleged patent infringements is still pending in Germany.

Among the enforcement options available to the iPhone maker: Requiring Motorola to pull all infringing devices from store shelves and destroy them.

Not that that will ever happen. Motorola will almost certainly update its software to work around Apple’s patent. That said, the ruling does give Apple some new leverage in negotiating to turn back on the iCloud features in Germany that Motorola recently forced it to turn off.

Update: In a statement to AllThingsD, Motorola said, “Today’s ruling in Munich, Germany on the patent litigation brought by Apple concerns a software feature associated with performing certain functions when viewing photos in a ‘zoomed in’ mode on mobile devices. We note that the Court ruled that performing the functions in a ‘zoomed out’ mode does not infringe on this patent. We expect no impact to supply or future sales as we have already implemented a new way to view photos on our products that does not interfere with the user experience.”

This thing is well on its way to becoming the 100 Years War of intellectual property battles.

Not a setback at all. A victory! According to Motorola, anyway.

“We believe that inventors should be paid for their innovations, and the Appellate Court in Karlsruhe, Germany has agreed,” the company said in a statement. “After years of fruitless negotiation with Apple, Motorola Mobility was compelled to bring patent infringement proceedings and enforce a resulting injunction because Apple refused to negotiate a license agreement. MMI’s determination to collect fair compensation for Apple’s use of MMI’s patented technology has now been vindicated by the Appellate Court’s decision, which clarified and confirmed that Apple’s licensing offer to MMI in January is a contractually binding commitment to pay royalties to MMI on all of Apple’s cellular devices.”

That’s some epic spin, right there. Nice to hear that Motorola is as happy with the court’s decision as I imagine Apple is.

The Karlsruhe Higher Regional Court this morning ruled that a standards-essential patent injunction that would have forced Apple to remove its iPhones and iPads from store shelves in Germany cannot be enforced during an appeal. The ruling was issued after the court reviewed the licensing terms Apple offered Motorola Mobility for the standards-essential patents at issue in the case. Those patents are governed by FRAND (fair, reasonable and nondiscriminatory) licensing terms and evidently the court felt Apple’s proposal to be reasonable.

“At the current state of the proceedings … Motorola Mobility would violate its duties under antitrust rules if it continues to ask Apple to stop [iPhone and iPad] sales” the court said in a statement.

In other words, that “maximum per-unit royalty of 2.25 percent” that Motorola has been seeking on every iPhone sale isn’t going to fly in Germany. And if Motorola continues to press for it, the company may invite antitrust scrutiny.

For Apple, the ruling, while temporary, is a significant victory, lending credence to its claim that the royalites Motorola is seeking for its standards-essential patents are unfair, unreasonable and discriminatory. For Motorola — and its new owner, Google — it’s a blow that could undermine its legal strategy of seeking injunctive relief based on standards-essential patents. More on that here, from Florian Mueller at FOSS Patents.

The Karlsruhe court believes Apple has made sufficient good faith efforts at licensing the patents at issue in this case that Motorola would be in breach of antitrust regulations if it were to attempt to enforce the December injunction.

Motorola Mobility did not respond to requests for comment.

Apple, which has spent the past day pulling older model iPhone and iPad inventory from the shelves of its online store in Germany, is now scrambling to restore it. This morning, a court temporarily suspended an injunction that prevented Apple from selling or distributing iOS devices believed to infringe certain Motorola Mobility patents.

In a statement given to AllThingsD, Apple confirmed that the iPhone 3G, iPhone 3GS, iPhone 4 and 3G/UMTS-based iPads should be returning to the shelves of its German online store in a matter of hours.

“All iPad and iPhone models will be back on sale through Apple’s online store in Germany shortly,” an Apple spokeswoman told AllThingsD. “Apple appealed this ruling because Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago.”

The injunction at issue here was granted last December, but wasn’t served until recently, sources say. Apple began making the appropriate adjustments to its German online store earlier this week, while continuing to appeal the injunction, which was subsequently suspended this morning.

So what happens next? Well, this is only a temporary suspension. So, at best, it’s a brief reprieve for Apple, until the legal issues surrounding it are resolved. Top among them: Apple’s argument that Motorola Mobility is not honoring the FRAND licensing obligations (fair, reasonable and non-discriminatory) it has on some standards-essential patents.

“In a best-case scenario for Apple, the suspension would now be in effect until the appeals court makes a decision on Apple’s appeal,” FOSS Patents’ Florian Mueller explains. “In that case, it would be in effect for well over a year.”

First, a German court handed the South Korean company a setback, rejecting one of the seven patent infringement claims it had brought against Apple. In the court’s view, Samsung’s claim that Apple violates this particular patent, which relates to 3G/UMTS wireless standard, isn’t valid, though the presiding judge hasn’t yet explained why that’s the case.

Far more interesting is this second bit of news coming out of the German courts today. Evidently, Apple has decided to assert its slide-to-unlock patent against Samsung’s Galaxy Nexus. This is the first time Apple has fingered the Nexus as an infringing device, and its decision to do so appears to be a significant escalation of the company’s campaign against Android. Not only is the Galaxy Nexus one of Samsung’s hero smartphones, it’s also Google’s Android 4.0 reference device.

In fact, it’s the only smartphone shipping with Android 4.0 right now. In other words, it’s the latest “pure Google” phone. Which is noteworthy.

“Judging by the first three weeks of 2012, Apple’s intellectual property assertions against Android continue to escalate,” patent analyst Florian Mueller told AllThingsD. “Samsung appears to be no less determined to fight. Apple’s supplemental infringement contentions targeting the Android 4.0 lead device are an unequivocal signal to Google that Apple doesn’t shy away from a frontal assault.”

Apple has filed suit against Samsung once again in Germany, looking to ban the sales of a number of smartphones and tablets. Filed in Dusseldorf Regional Court and based on a number of design patents, the suit targets Samsung’s Galaxy S II and its Galaxy S Plus, along with eight other smartphones.

Reached for comment, Apple reiterated the same line it has been using to upbraid Samsung throughout the pair’s legal spat:

“This kind of blatant copying is wrong, and we need to protect Apple’s intellectual property when companies steal our ideas.”

While the carrier gets valuable spectrum, a roaming agreement and $3 billion in cash, the future of the No. 4 U.S. carrier is cloudier than ever, now that AT&T has called off its planned purchase.

T-Mobile has been operating as something of a lame duck since AT&T first proposed its $39 billion acquisition in March. Consumers, employees and potential partners have all been writing the carrier off, assuming that it would soon be swallowed up by its far-larger rival.

The abrupt turn of events will send T-Mobile and its parent company back to the drawing board, which will include soliciting new buyers, figuring out a strategy for its next-generation network and coming up with some inducements to avoid losing even more customers.

The blow of the breakup is only softened by the fact that the Bellevue, Wash.-based carrier will be handed a huge chunk of spending money to ride out the near-term bumps.

As T-Mobile looks to come up with Plan B, here are some potential options:

Spectrum sharing: As part of the breakup, AT&T has entered a mutually beneficial roaming agreement with Deutsche Telekom. Terms of the agreement have not yet been shared, but there could be some pretty compelling outcomes.

In Europe, it is common for carriers to share spectrum and even the cost of maintaining the network and towers. From the consumer’s perspective, it’s two different networks and two different brands. The carriers only end up competing on handset offerings, price and features — not coverage.

Another merger: T-Mobile will entertain any and all offers. Most recently, Dish said it was interested in partnering with T-Mobile if its merger with AT&T fell apart. Other candidates could include Sprint, or other companies from the media industry that are always sniffing around wireless, such as cable operators.

A bid from a company like Google or Microsoft would definitely make things interesting. While both are less likely candidates, they could use the network to push their agenda, including handsets and applications.

A total overhaul: The $4 billion breakup fee could give Deutsche Telekom the confidence to take another shot at the U.S. market. Probably not, but there’s always a chance. The company’s roots have been entrepreneurial and scrappy, but it’s been awhile since it has been able to make an impact on the market.

Worst-case scenario: Deutsche Telekom passes out the cash as a dividend to stockholders. It has always leaned on the U.S. as a moneymaker, and this could be no exception.

The 4G conundrum: Regardless, T-Mobile still does not have enough spectrum to update its network to the next generation. It may gain access to AT&T’s 4G network as part of the roaming agreement with AT&T, but both companies will arguably need more spectrum to keep up with demand.

The only two options will be to partner with Clearwire or LightSquared, or to wait until the next government auction. Both Clearwire and LightSquared are always in need of more cash, and have their difficulties. A deal with Clearwire would be additionally complicated by the fact that Sprint owns nearly half of the company.

AllThingsD’s Ina Fried contributed to this report.

It’s a definite win for Motorola, particularly if Apple is unable to secure a stay of the injunction during appeal. That said, it may not be quite as bad for Cupertino as it seems. It’s certainly not going to keep the company’s iOS devices out of the single largest market in the EU over the holidays.

Why? Even if Motorola decides to bear the risk of enforcing a ruling that might be overturned later, the injunction applies to the importation of new iOS device shipments. It doesn’t apply to existing inventory. And sources say Apple has plenty of iPhones and iPads on hand in Germany already — enough that it’s not too concerned about losing out on the Christmas consumer binge there. The company even says as much in the brief statement it issued on the matter today.

“We’re going to appeal the court’s ruling right away,” an Apple spokesperson told AllThingsD. “Holiday shoppers in Germany should have no problem finding the iPad or iPhone they want.”

But what about after the holidays, when that inventory begins to run out?

Again, Apple’s fate largely depends on whether it’s able to stay the injunction pending appeal, assuming Motorola attempts to enforce it. Beyond that, there’s the validity of the two 3G patents at issue in the case, and whether or not they are standards-essential and subject to fair, reasonable and non-discriminatory licensing terms. More on that over at FOSS Patents.

Then Whitman hedged: “Let me put it that way. I would say these are going to be more acquisitions, in the sub-$500 million range would be my guess. We might get to $1 billion, but I doubt it.”

Now we know what she meant by that. Overnight, HP said it will acquire Hiflex Software, a German maker of printing management software. The deal is small enough that terms haven’t been disclosed, and that makes it hard to analyze.

Hiflex is based in Aachen and specializes in supplying print services to the commercial printing and graphics industry. Launched in 1991, it has completed some 300 customer projects, and its products are generally used to help different parts of a printing operation work together.

Vyomesh Joshi, HP’s executive vice president and the head of its Imaging and Printing group, described the deal like so: “HP wants to break the traditional barriers of how and where business customers print, making it easy for them to produce custom or personalized materials anywhere, anytime … Hiflex’s technology provides a powerful platform to deliver on this goal as part of our overall cloud printing strategy.”

Brian Marshall, an analyst with ISI Group, said in a note to clients this morning that he thinks it’s a “small deal,” but one that amounts to “an inexpensive way for HP to build exposure to cloud services that integrate with existing HP assets,” like printing.

If HP is going to be acquisitive at all during 2012, the deals are going to look like this. Now, at least, we know what to expect. And, as Whitman sets expectations, so far she’s sticking to what she says, which is a good sign.

In a statement issued last Friday, Samsung said it was “disappointed with this ruling and believes it severely limits consumer choice in Germany,” adding that it “also believes that by imposing an injunction based on this very generic design right, this ruling restricts design innovation and progress in the industry.”

Samung’s appeal of the Düsseldorf court’s ruling follows reports earlier today that the South Korean company has sued Apple for patent infringement in France.

“The court is of the opinion that Apple’s minimalistic design isn’t the only technical solution to make a tablet computer, other designs are possible,” Presiding Judge Johanna Brueckner-Hofmann said in her verdict. “For the informed customer there remains the predominant overall impression that the device looks [like the iPad].”

This is the second time the Düsseldorf Regional Court has upheld this particular injunction, and while it declined to extend the ban to the rest of the European Union as Apple had hoped, it’s still an important victory. Germany is Europe’s third-largest tablet market after Britain and France, according to Strategy Analytics. And as Florian Mueller notes over at FOSS Patents, there’s no quick and easy way for Samsung to have the ban lifted.

“The preliminary injunction stays in force until it is either overturned by the Higher Regional Court in a fast-track appeals proceeding or by the (lower) Regional Court at the end of the full-blown main proceeding, which would probably take about a year,” Mueller explains. “If the outcome of the full-blown main proceeding (including possible appeals of that one to one or two higher courts) is that the preliminary injunction was rightfully granted, it becomes a permanent injunction.”

Facing a barrage of negative press about its upcoming IPO, Groupon CEO and co-founder Andrew Mason took up a pen to counter critics of the social buying service.

Especially under scrutiny has been the Chicago-based Groupon’s accounting of its finances — along with worries that its torrid growth is slowing — both of which Mason addressed in detail in a pugnacious email memo to his thousands of employees.

Specifically referencing a recent article speculating that the daily deals site was running out of money, Mason said, in part:

“While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.”

Mason also took on the controversial ACSOI — or adjusted consolidated segment operating income — metric that Groupon used in its initial filing and later stepped back from.

“The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state — we just didn’t realize there would be so many skeptics,” wrote Mason.

Mason also took some aim at competitors, such as LivingSocial and Yelp, in the email.

As for the public offering, which is expected next month:

“If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.”

Then again, that is exactly what a dad-to-be would say about his baby, whatever it looked like.

Mason, when asked about the memo, declined to comment.

There is a lot more than that, so here’s Mason’s full email for all you pencil pushers to peruse:

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.

While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.

I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS

Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING

Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION

If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

4. OUR TEAM

This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”

I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS

I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.

Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Speaking of “it looks good,” here is Conan O’Brien with a Tourette’s version of Mason’s new catchphrase:

The German court that issued a preliminary injunction banning Samsung from selling its Galaxy Tab 10.1 tablet in most of the European Union partially lifted it Tuesday, allowing the South Korean company to continue selling the device in EU nations outside Germany.

Evidently Samsung questions whether the Dusseldorf District Court has the authority to prevent a foreign company from selling its products outside Germany. And until that issue is resolved, Samsung is free to peddle the 10.1 again, as long it’s not produced or distributed by its German unit, which is still governed by the original injunction.

The Dusseldorf District Court is scheduled to hear Samsung’s appeal on August 25, at which time it could reinstitute the injunction or lift it entirely.

SAP said that its closely watched software and software-related service revenue, which includes new licenses and maintenance, is now expected to be at the upper end of its forecast for growth of between 10% and 14% this year. It anticipates that to translate into increased profits and expects its operating profit to be at the top end of its €4.45 billion to €4.65 billion ($6.46 billion to $6.75 billion) guidance range.

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