Zynga shares fall as company slashes forecast
Friday, 5th October 2012 at 6:32 am
CEO Mark Pincus issues rallying cry to employees
Social games giant Zynga has cut forecasts for the year for the second time in as many quarters.
The news prompted company shares, launched at about ten dollars in December, to tumble to an all time low of $2.19 before bouncing back to close at $2.81.
The stock price has since fallen in after hours to $2.28.
Zynga's current expectations for the third quarter are between $300 and $305 million, with bookings betwen $250-$255 million.
This has resulted a lowered year-end forecast of at most $1.1 billion, down from a high-end of 1.225 billion.
Zynga CEO and founder Mark Pincus issued a statement on the company blog adressed to company employees that admitted that while the company was falling short of some targets, there was plenty of cause for optimism.
"While we’re disappointed with these financial results, we’re proud of the progress that our teams made on many fronts," said Pincus.
"We continue to see the power of our player network, launching three games, each achieving top ten status with more than six million daily players.
"Within its first six weeks, ChefVille has become a mainstay for 45 million monthly players and FarmVille 2 introduced stunning 3D farming for the first time in a web browser becoming the most popular social game within three days of network launch."
Pincus promises the company will continue expanding into the casino genre, where the company leads with Zynga Poker, and "blue PvP," a category he says his company pioneered with Mafia wars.
Zynga blames the financial results on the poor performance of its live web games, as well as an estimated impairment charge of between $85 and $95 million for the aquisition of OMGPOP.
The company is planning to cut costs, a move almost certainly necessary considering a net loss of $90-105 million and the current transition from the role of multi-studio developer to multi-platform publisher.
Zynga will present its finalized Q2 earnings in a press release on October 24th.
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