Zynga lowers outlook, CEO hints at cuts


Zynga (NASDAQ:ZNGA) said it will report weaker third quarter revenue and lowered its full-year guidance for 2012. In addition, Zynga CEO Mark Pincus hinted that the company will address these near-term challenges "by targeted cost reductions" and by focusing on its new game pipeline.

Specifically, Zynga lowered its estimated annual bookings to $1.09 billion to $1.1 billion, down from the previous forecast of $1.15 billion to $1.225 billion. In addition, it predicts its third quarer revenue will be between $300 million to $305 million.

Interestingly, the company also said its third-quarter results will include a write-down of $85 million to $95 million of mobile gaming firm OMGPOP, creator of Draw Something. Zynga purchased OMGPOP for about $180 million in March.  

In the second quarter, Zynga reported losses of $22.8 million, which executives blamed on recent algorithmic changes made by social network Facebook, as well as diminishing mobile traffic for high-profile acquisition Draw Something. Despite its troubles, Zynga's second quarter revenues reached $332.5 million, up 4 percent over the first quarter of 2012. Zynga now boasts more than 300 million monthly active users, including 33 million daily active users on mobile.

But Zynga's financial troubles have taken a toll on the company as several high profile executives have resigned. In September, Jeff Karp resigned as chief marketing and revenue officer of the company. Chief Operating Officer John Schappert exited in August, just days after he was stripped of his responsibilities as head of social gaming development; Chief Creative Officer Mike Verdu soon followed to launch his own startup.

For more:
- see this AllThingsD article
- see this WSJ article (sub req.)
- see this Bloomberg article

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Article updated Oct. 24 to correct revenue expectations.

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