55tuan Layoff Rumors Mark Latest Group Buying Distress Call 传窝窝团大裁员团购业前景黯淡

By newsdoug on September 29, 2011

I’m usually reluctant to report on rumors, but a posting on Sina’s (Nasdaq: SINA) Weibo late yesterday that group buying giant 55tuan was launching massive layoffs seemed too big to ignore, reflecting troubles at both the company and in the money-losing group buying space. Sina itself followed up on the Weibo post by contacting the poster, who reiterated that 55tuan had cut 22 of the 31 people in the local markets division where he works, or about 70 percent of the division. (Chinese article) I suspect we’ll see domestic media follow up on this rumor today, and clearly you can’t extrapolate big cuts in a small regional division to an entire company. But at the very least, assuming this worker is really from 55tuan, this kind of a big cut in a single division probably points to major adjustments being made at 55tuan, which in July had to abandon plans for a US IPO after several investment banks refused to handle the deal over concerns about accounting records at some of its recently acquired assets. (previous post) Rival Lashou, China’s biggest group buying site, was racing to find an investment bank for its own IPO earlier this month, after Goldman Sachs and Morgan Stanley reportedly resigned from the case over similar concerns. (previous post) Both 55tuan and Lashou raised $100 million or more earlier this year amid a boom in China’s group buying sector that resulted in fierce competition, drawing the field of money-losing players deeper into the red. The layoffs at 55tuan, if true, would be the most significant in the sector so far, following major cuts at Gaopeng, the group buying joint venture between US giant Groupon and China Internet leader Tencent (HKEx: 700) earlier this year. Investors look unlikely to pour more funds into these money-losing companies anytime soon, which means that unless they can raise money some other way most are likely to go into a “cash preservation” mode by implementing severe spending cuts including layoffs and reduced marketing activities. When that happens, look for a ripple effect to hit other web firms like Baidu (Nasdaq: BIDU) and Sina, that rely heavily on ad revenues for their income.

Bottom line: Rumors of layoffs at group buying site 55tuan, if true, would mark the most significant sign to date of distress in the overheated sector, which is poised for a major shake-up.

我通常不愿探讨传言，但昨晚新浪(SINA.O)微博上称窝窝团将大规模裁员，这则消息实在不容忽视，它反映了该公司以及整个团购行业面临的困境。新浪後来与微博作者取得联系，对方称其曾在窝窝团工作的部门大幅裁员。我估计今天国内媒体会就此追踪报导，当然我们不能基于一个部门的裁员来推测整个公司。但我们至少可以这麽想，若一个部门大幅裁员，可能意味着公司正进行重大调整。窝窝团此前曾打算赴美上市，後来因多家投行对其收购的一些资产的会计记录存在顾虑，拒绝接手其上市事宜，导致窝窝团7月放弃赴美上市。另一团购网站–拉手网本月早些时候也苦苦寻找投行安排上市事宜，此前摩根士丹利(MS.N)和高盛(GS.N)出于类似顾虑，退出拉手网上市案。今年早些时候，中国团购业如火如荼之际，窝窝团和拉手网均曾筹资至少1亿美元，但後来行业竞争加剧，团购网站亏损严重。如果窝窝团大幅裁员消息属实，则将是高朋网今年大规模裁员後，团购业最轰动事件。短期内投资者不太可能再向这些亏损公司投入更多资金，这意味着它们除非能有别的筹资渠道，否则就不得不保存现金，通过裁员和减少营销活动等途径削减支出。一旦出现这样的局面，势必波及百度(BIDU.O)和新浪等严重依赖广告收入的网络公司。

一句话：窝窝团裁员传言若属实，则是团购业陷入困境的最明确信号，意味着该行业将出现重大调整。

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