Expenses curb surging revenues; Market panic clouds IPO bid
Zynga, the social games giant currently struggling to become publicly traded, has reported a 90 per cent drop in second quarter net income.
The social games giant’s net profit sank to $1.4 million for the three months ending July 30. In the same period a year prior, the San Franciscan company made about $14 million.
The news could add further disruption to Zynga’s painful and protracted initial public offering.
In July the group bid to have its shares listed on the New York Stock Exchange, though wider market turmoil has delayed the deal.
Zynga’s revenue grew 115 per cent in the same period, up to $279 million, which suggests expenditure was a factor in the slump.
Wedbush Morgan analyst Michael Pachter said Zynga has booked development and marketing costs for two major games, Empires & Allies and Adventure World, while revenue from those releases would not flood in until the next financial period.
Zynga’s IPO bid is still on course to be completed after November, the company recently said. But panic swept across the markets yesterday, pulling the economy down to what some economists are calling “pre-Lehman Brothers levels”.
At a conference yesterday, the International Monetary Fund claimed the western world would not suffer a second recession, but the group was “losing hope” in that belief each day as the Eurozone continues to suffer from economic paralysis.