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October 5, 2012

Zynga shares nosedive after company cuts 2012 outlook

The social gaming company’s stock woes continue.

By Tineka Smith


Zynga announced disappointing preliminary financial results for Q3 2012.

The company expects to report a net loss of between $90m and $105m but expects revenue to range from $300m to $305m.

The company says the preliminary results are partly caused by the weakness of certain games in their web "invest and express" category, which include an impairment charge of between $85m and $95m.

Zynga is also lowering its outlook for the year 2012. The company reported that bookings are expected to be between $1.085bn and $1.1bn compared to previous expectations of $1.150bn and $1.225bn.

Zynga shares fell 20% yesterday to a record low of $2.19 per share after the announcement.

"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," said Mark Pincus, Zynga CEO and founder. "We’re addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities. "

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The social gaming company says they are addressing downfalls by cost reductions and making sure their game pipeline reflects their strategic priorities. Zynga also says that they will continue to work on their mobile platform.

"We are continuing to invest in our mobile business where we have one of the strongest positions in the industry," said Pincus."These actions support our strategy to transition from being a first-party web game developer to a multi-platform game network."

Zynga’s stock has had difficulty reaching its projected high since going public in December 2011. Zynga prices were $14.50 per share in March this year but have seen a downward spiral since.

Please follow this author on Twitter @Tineka_S or comment below.

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