Zynga shares climb as game maker cuts losses

Feb 05, 2013 by Glenn Chapman
Zynga, the struggling social games pioneer, showed signs it is getting a grip on spending with an earnings report Tuesday revealing narrowing losses, which sparked an after-hours rally in shares.

Zynga, the struggling social games pioneer, showed signs it is getting a grip on spending with an earnings report Tuesday revealing narrowing losses, which sparked an after-hours rally in shares.

Zynga stock was up more than five percent to $2.88 a share after the firm reported that it lost $48.5 million on revenue of $311.2 million in the quarter that ended December 31.

The revenue was little changed from the same period a year earlier, but the loss was a fraction of the $438 million lost in the final three months of 2011. The results topped Wall Street expectations.

"Our team executed well in the fourth quarter and made important progress in building sustainable new revenue streams and further aligning our company around our best growth opportunities," said Zynga chief operations officer David Ko.

"Zynga already has the largest social gaming audience and remains the best positioned company to lead in building the future of social gaming."

The number of monthly active users of Zynga games grew to 298 million in the quarter, a 24 percent increase from the same period a year earlier but a slight drop from the previous quarter.

Zynga, which had suffered from delays fielding new games, launched six titles in the final three months of last year and boasted five of the Top 10 games at leading social network Facebook at the end of 2012.

The San Francisco-based company also continued to expand its zynga.com website for play.

"2013 will be a pivotal transition year and we are focused on achieving three strategic objectives: growing our franchises on mobile and web, expanding our network and maintaining profitability," Ko said.

In October, Zynga began trimming workers, shuttering studios and shelving older titles to get in financial shape for the long term.

Zynga announced that it was "parting ways" with five percent of its approximately 3,300 full-time workers and dumping 13 games, along with significantly cutting its investment in "The Ville" franchise.

The cost-cutting measures are intended to let Zynga focus on more promising games and ramp up its network on the Web and on mobile devices.

Zynga rose to stardom by tailoring games for play by friends on Facebook and went on to create its own online playground at zynga.com.

In December, Zynga confirmed that it has taken a baby step into real-money gaming in the state that is home to casino-rich Las Vegas, part of a possible broader strategy for online gambling where it is legal.

Zynga said that it has applied to the Nevada Gaming Control Board for a "preliminary finding of suitability" that would clear the way to seek a license to let players of its online games bet real cash.

"This filing continues our strategic effort to enter regulated RMG (real money gaming) markets in a prudent way," Zynga chief revenue officer Barry Cottle said at the time.

"As we've said previously, the broader US market is an opportunity that's further out on the horizon based on legislative developments, but we are preparing for a regulated market."

Poker and casino style games are among popular Zynga titles.

The Nevada move came less than two months after Zynga announced a partnership with RMG operator Bwin.party to run poker, roulette, blackjack and other virtual casino games in Britain.

Explore further: Monoprice takes on Amazon in trade of cheap electronics

add to favorites email to friend print save as pdf

Related Stories

Zynga to report 3Q net loss, take charge

Oct 04, 2012

(AP)—Zynga expects a loss for the third quarter and says its preliminary results reflect weak demand for some games. It's also taking a charge related to its acquisition of OMGPop, a mobile game maker.

Zynga posts 4Q net loss on IPO-related stock costs

Feb 14, 2012

(AP) -- Online game maker Zynga Inc. reported a net loss in the last three months of 2011, weighed by hefty stock-compensation expenses and other costs in its first quarter as a public company.

Ahead of the Bell: Zynga to post 4Q results

Feb 14, 2012

(AP) -- Zynga will show whether it was able to further boost its rapidly growing number of followers, as well as its profit and revenue as a publicly traded company, when the online game maker reports fourth-quarter results ...

Amazon.com posts lower 4Q net income

Jan 29, 2013

Amazon.com says its fourth-quarter net income fell 45 percent, as higher revenue failed to keep pace with increased spending on order fulfillment and digital content.

CenturyLink 3Q net income falls as expenses rise

Nov 02, 2011

(AP) -- Phone company CenturyLink Inc. says its third-quarter net income fell as rising operating expenses related to its April acquisition of larger phone company Qwest overshadowed increased revenue.

Recommended for you

Chinese tech giant Alibaba set to make a splash with US IPO

8 hours ago

The largest tech IPO of the year will come from a company that many Americans have never heard of. Alibaba Group - a Chinese e-commerce behemoth - has decided to go public in the U.S. after months of speculation that it would ...

Ex-Apple chief plans mobile phone for India

Apr 19, 2014

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Apr 19, 2014

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

User comments : 0

More news stories

Growing app industry has developers racing to keep up

Smartphone application developers say they are challenged by the glut of apps as well as the need to update their software to keep up with evolving phone technology, making creative pricing strategies essential to finding ...

Making graphene in your kitchen

Graphene has been touted as a wonder material—the world's thinnest substance, but super-strong. Now scientists say it is so easy to make you could produce some in your kitchen.