updated 05:42 pm EDT, Wed July 25, 2012
Profits down as gamers go mobile
In its quarterly financial announcement today, online game company Zynga released results that disappointed analysts and sent shares in the company spiraling down. Zynga's continued troubles with transitioning to the mobile web took a toll last quarter, with the company reporting $332.5 million in sales. As Bloomberg details, that figure was far below analysts' expectations, and Wall Street subsequently voted no confidence in Zynga in after hours trading.
Zynga's report today showed sales of $332.5 million -- up 19 percent year-over-year -- and bookings of $302 million -- up 10 percent year-over-year. Analysts had predicted about $343.1 million in sales. The company saw a net loss of $22.8 million for the quarter -- compared with a profit of $1.4 million for the same quarter in 2011 -- and lowered its full-year 2012 earnings per share estimate to 4-9 cents from 23-29 cents.
The shift among consumers toward heavier mobile device use has proven difficult for Zynga to navigate. The company's fortunes are tightly linked to those of Facebook, though Zynga has of recent been trying to branch away from the social network. Its efforts are not helped by the fact that Zynga's best-known franchises -- FarmVille, CastleVille, and CityVille -- have all lost at least a fifth of their users from the first to the second quarters of this year, according to some estimates.
Still, the company believes it has a way to turn things around. Zynga With Friends, a new social networking service, is expected to launch soon, and will aim to merge mobile gaming and social networking in a manner entirely separate from Facebook. Investors, though, are less confident about Zynga's future; shares in the company were trading at around $5.08 in the after hours.