Social game services provider Zynga has once again slashed its 2012 outlook, marking the second time in as many months that it has warned of trouble ahead.
The company is now estimating a third quarter loss of 12 to 14 cents and an adjusted earnings of $147 million to $162 million in contrast of a previous outlook of $180 million to $250 million. Those numbers are before interest, tax, depreciation and amortization, of course.
On news of the diminished outlook, Zynga shares fell 18 percent to $2.30 – a record low. The company will make its third quarter fiscal report in about three weeks.
Part of the problem is an expected hit of between $85 million and $95 million over its deal for OMGPOP, a $182 million deal in March that was supposed to replicate the success of the game studio’s popular “Draw Something” product. That next smash hit never came.
Another part of the problem for Zynga is the fact that its users are a notoriously fickle bunch. Its games, including “FarmVille” and “Mafia Wars,” aren’t nearly as popular as they used to be and some of the shine has worn off the apple.
With game delays and other development issues impacting Zynga’s ability to put out more games and company morale sinking as a result, there’s no telling how this year will end for the once-touted company.
In July, Zynga cut its earnings forecast for the first time this year. Shares dropped 40 percent as a result, leaving the high of $14.69 a share from its March figures in the dust.
Still, Zynga is the most popular gaming platform available on Facebook. It boasts 306 million monthly active users, with games like “Zynga Poker” and the popular “Words With Friends” having the most active daily users on the social networking site. Like Facebook, though, Zynga’s numbers and fortunes started to take a hit almost as soon as it went public in December of 2011.
The company has already been putting the word out that its focus is on “cost reductions” and “focusing on our new game pipeline,” which could translate to any number of things. Zynga currently has over 3,000 employees and layoffs could be in the works, although it’s hard to say for certain. At this point, something has to give and something has to stop the bleeding. And somebody has to water those “FarmVille” crops!
Did you like this post ? TheTelecomBlog.com publishes daily news, editorial, thoughts, and controversial opinion – you can subscribe by: RSS (click here), or email (click here).
Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.
