Zynga Charges Forward Despite More Layoffs
Desperate to reclaim territory in online gaming, Zynga (NASDAQ:ZNGA) CEO Don Mattrick is taking an aggressive approach. The company announced it would acquire Natural Motion Ltd., maker of the popular “Clumsy Ninja” game, while it would shed 314 jobs in order to cut expenses, Bloomberg reports. Both moves fueled a major surge in Zynga stock in after-hours and early morning trading.
The Mattrick era at Zynga is offering appeal to investors who considered the gaming company headed in the wrong direction under founder Mark Pincus. Most investor frustration can be traced to the company’s slow shift into the mobile arena, where apps for “Farmville” and other popular titles have remained absent for too long. Consumers who played Zynga’s games on Facebook (NASDAQ:FB) began looking for the programs as apps on mobile devices, but Zynga was unable to respond with any concerted effort.
Acquiring Natural Motion Ltd. reflects a deep commitment to mobile gaming, but the news was accompanied by a report of desperately needed revenue growth. Zynga bested revenue estimates in the fourth quarter of 2013 with an uptick in “Words With Friends” and other titles, Bloomberg reports.
The news propelled a rally for Zynga stock in after-hours trading, boosting shares 20 percent early on Friday.
The downward trend in mobile user stats will be addressed with the Natural Motion buy. Titles such as “Clumsy Ninja” command large followings among mobile device users, a fact that appears to be the driver behind an acquisition that will cost Zynga $527 million in cash and company stock. To pay for that tab, hundreds of Zynga employees will be left out in the cold.