Zynga shares plummet again

The company cuts earnings and revenue forecasts and takes a writedown related to a once-hot acquisition.

By Kim Peterson Oct 4, 2012 5:41PM
Image: Arrow Down (Kyu Oh/Photodisc/Getty Images)Zynga (ZNGA) shares fell more than 19% in after-hours trading Thursday after the company offered bleak news about its third quarter and lowered its full-year forecast.

The online gaming company said that it will likely report a net loss of 12 to 14 cents a share for the quarter. Excluding one-time items, the company said it would likely break even or lose a penny per share. Zynga also said that revenue would come in at between $300 million to $305 million.

The company will report its full quarterly results on Oct. 24. For the full year, Zynga lowered its bookings projection to between $1.085 billion and $1.1 billion. The previous projection was between $1.15 billion to $1.225 billion.

And the company's acquisition of OMGPOP has pretty much turned out to be a bust. Zynga announced a write-down related to the acquisition in the neighborhood of $85 million to $95 million. It reportedly paid $200 million for the app developer earlier this year.

Zynga CEO Mark Pincus tried to rally his team in an employee e-mail Thursday:
Let’s not lose sight of the bigger picture. The world is playing games, and is increasingly choosing social games. Zynga has become synonymous with social gaming serving 311 million monthly active users, the largest player network on web and mobile.
But one look at Zynga's stock price tells another story. Shares closed Thursday at $2.82, and were down to $2.29 in after-hours trading. The company debuted last December at a $10 IPO price. How low will Zynga fall when the market opens Friday?

Zynga, by the way, is one of Facebook's (FB) largest sources of revenue. Shares of Facebook were down more than 2% in after-hours trading Thursday.

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Tags: FBZNGA
2Comments
Oct 4, 2012 9:14PM
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Beyond my imagination that anyone thought this was / is a viable company.
Oct 4, 2012 10:41PM
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It isn't any worse than FB and LinkedIn. ZNGA and FB have tanked since their IPO although I still think FB is overvalued especially after its come back from the $18 area but check out LinkedIn. The company is trading at a PE of something like 500x or something stupid like that. I don't get what investors are doing. It is like people forgot what happened when they bought stupid stocks in the late 1990s leading up to the dot com bubble. Just silly and stupid for history to be repeating itself already especially given our economy today.
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