Zynga did not lose as much money last quarter as forecast – Oh boy!

Zynga logoI admit I am far from being qualified to understand the proceedings on Wall Street. Tuesday afternoon online gaming platform Zynga ‘reported a fourth-quarter loss of $48.6 million, or 6 cents a share, on sales of $311 million. The “adjusted” earnings were 1 cent a share. Street consensus was for an adjusted loss of 3 cents a share, and sales of $250 million. The revenue figure was down just a hair from a year ago – $311.17 million compared to $311.24 million – and the loss was far narrower, 6 cents compared to $1.22.’

Among the well-known Zynga properties are Farmville, Frontierville, and Cityville. Zynga projected that revenue will fall in the first quarter of 2013 by as much as 20% over 2012 –
Wall Street apparently was buoyed by this news as the stock rose more than 7% in late trading on Tuesday. Maybe it is the work of pure speculators but I still have no idea how Zynga could possibly be any kind of buy and hold investment. That losing nearly $50 million in a quarter with a projection of sales dropping by 20% in the following quarter is seen as a positive sign is mystifying to say the least.

Zynga CEO Mark Pincus has made it well known that Zynga needs to A) have a life outside of Facebook, and B) find a way to make the mobile channel work. To date I’ve seen nothing that would lead me to believe that Zynga is closer to achieving either of those objectives. Full disclosure, I’ve never played a single Zynga game. This is mostly because I fear being sucked into a great time void that would provide me with hours of insubstantial but somehow compelling activity.

I realize that I am as vulnerable to falling into online gaming as anyone so I choose to simply not play any online games. Where would I draw the line? Words with Friends (yes another Zynga title) would be fun – after all I like Scrabble, but I just won’t succumb. I wonder how many other people feel as do I?

Zynga also is considering adding a gambling component to its platform by announcing (this past October) a partnership with Bwin. Party Digital Entertainment with launch in the UK planned for later this year. Zynga has also filed an application in Nevada for a gaming license in the state.

I get the feeling that people that I know who play Zynga games are beginning to tire of the activity and may be quite ready for the ‘next thing’ – whatever that might be. I’d love to hear from those of you that play Zynga games even if only occasionally. Do you like it as much as you did when you first started? After reading the earnings report do you think Zynga will find a way to make it for the long haul?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Best business practices, Entertainment, Online gaming, Social gaming and tagged , , , , , , , . Bookmark the permalink.

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