Zynga Slammed as it Cuts its Guidance...Again
Zynga announced preliminary third-quarter sales between $300 million and $305 million. Excluding items, the company expects a result between breakeven and a loss of 1 cent a share. Zynga also announced it will be taking a write-down between $85 million and $95 million associated with its purchase of OMGPOP earlier this year.
TheStreet questioned Zynga's purchase of OMGPOP, which was approximately $180 million, in an interview with Mike Gupta, Zynga's vice president of finance, and treasurer, earlier this year.
Analysts polled by Thomson Reuters were looking for the San Francisco-based game developer to report break-even earnings on $275.9 million in revenue for the third-quarter.
For the full year, Zynga now expects bookings between $1.085 billion and $1.1 billion, down from a previous range of $1.15 billion and $1.225 billion). Adjusted EBITDA is expected to be between $147 million and $162 million, down from a previous look of $180 million and $250 million.
The company cited weaker-than-expected third quarter results, as well as reduced expectations for certain games including The Ville and launch delays for the full-year cut.
"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 CEO Mark Pincus in the press release. "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. At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry."
In July, Zynga lowered its 2012 outlook for some of the same reasons, citing "delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something."
Shares of Zynga closed the regular session higher, gaining 0.54% to close at $2.82. Zynga was down sharply in after-hours trading, off 11.9% to $2.48 on more than 250,000 shares.
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--Written by Chris Ciaccia in New York
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