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Kayak and Groupon: A Tale of Two Web Sites

Groupon was able to lift its battered share price by launching a mobile payments venture earlier this fall; however with competition from eBay (EBAY) and others, it's hard to see a comparative advantage. Other new ideas, like Groupon Goods and Groupon Getaways, are a late entrance into online retail and travel markets. A recent international push was seen as one of the biggest disappointments in the company's third-quarter earnings.

While Kayak was able to impress Priceline with its nimble and differentiated operations, Groupon's unruly set of operations may be dissuading investors from taking a look, as losses for daily deals ventures like Amazon's (AMzN) LivingSocial escalate.

In third-quarter earnings, Groupon reported break-even adjusted earnings on $568.8 million in revenue. Analysts polled by Thomson Reuters were looking for earnings of 3 cents a share on $590.12 million in revenue. Revenue rose 32% year-over-year, but Wall Street was looking for more.

"Overall, the disappointing profit guidance for 4Q12, uncertainty around Groupon's direct revenue business, and the ongoing overhang from the restatement of 4Q11 results, continues to suggests to us that GRPN's business model is in flux and highlights that there remains a high degree of investment risk. Hence, we are taking a wait-and-see approach," wrote Credit Suisse analysts, in reaction to earnings.

As seen on Thursday, investors and strategic buyers are far more likely to take interest in lean operations on a targeted upswing, than sprawling businesses in a state of flux.

Interested in more on Groupon? See TheStreet Ratings' report card for this stock.

-- Written by Antoine Gara in New York

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