Why is Zynga Using Facebook as a PUNCHING Bag?
Zynga’s (NASDAQ:ZNGA) dismal earnings report and the consequent plunge taken by its stock price was enough for the game maker to promptly blame its main platform to reach users, Facebook (NASDAQ:FB). While shares of the social network, which declares its own results after markets close on Thursday, also took a tumble because of Zynga’s poor performance, the latter was quick to transfer the blame.
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“Facebook made a number of changes in the quarter,” John Schappert, Zynga’s chief operating officer, said in a conference call with analysts. “These changes favored new games. Our users did not remain as engaged and did not come back as often.”
Zynga reported a net loss for the quarter of $22.8 million, compared with a net income of $1.4 million in the same quarter last year and earnings were 1 cent per share, way below analysts’ expectations of 5 cents a share. Revenue came in at $332.5m, a 19 percent increase from the same period last year, but below the $344.8 million predicted by analysts. The company also substantially cut down expectations for the full fiscal year, predicting earnings between 4 and 9 cents per share, compared with Wall Street’s predicted 26 cents.
While Zynga’s share price fell more than 40 percent after hours, Facebook’s stock fell nearly 8 percent.
Zynga chief executive Mark Pincus did try to sound optimistic about the future of the company. He said the game maker had plans to diversify its business — starting by looking for new categories of games it can build on Facebook, such as “male-oriented” games, and eventually moving to wider options in mobile gaming. “Getting beyond the Facebook web footprint through mobile is going to give us more growth opportunities for games,” he said.
The company also expressed hope about several new games planned for the second half of the year, including a new version of its flagship game, FarmVille. “The new FarmVille is reimagined from ground up and looks amazing,” Schappert said.
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