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Zynga's financial woes continue in its third fiscal quarter

Zynga's financial woes continue in its third fiscal quarter

October 4, 2012 | By Tom Curtis

October 4, 2012 | By Tom Curtis
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More: Social/Online, Business/Marketing

It seems Zynga is still struggling to overcome its major financial troubles, as the social game giant has experienced weak earnings for its fiscal third quarter, and has once again lowered its overall outlook for the rest of 2012.

Zynga says its performance has suffered because several of its "invest and express" titles (a category that includes FarmVille and CityVille) were particularly weak during the third fiscal quarter, and the newly-launched social game The Ville failed to live up to initial expectations.

Zynga's previous acquisition of Draw Something developer Omgpop also hurt its third quarter performance, as the company says it had to incur a charge of $85-95 million as part of a write-down on some of the studio's intangible assets.

The company won't reveal its final earnings for the third quarter until later this year, but Zynga says it expects to report revenues in the range of $300-305 million, and a net loss in the range of $90-105 million. By comparison, the company saw revenues of $334 million and a net loss of $23 million during its disappointing second quarter.

Zynga CEO Mark Pincus says the company is taking steps to turn the business around, however, as it plans to invest further in casino games like Zynga Poker, as well as player-versus-player games, a category Zynga dabbled in with the Mafia Wars series.

But for now, the company has decreased its booking expectations for the rest of the year from $1.150-1.225 billion to $1.085-1.100 billion.

"So why are we lowering 2012 guidance? There are a few factors contributing to a weaker than expected outlook for Q4," Pincus wrote in a company blog post. "The reduced performance of some of our live web games is continuing to impact results and we have several new games which are at risk of launching later than expected."

Since this announcement, the company's stocks have taken another major hit, and as of this writing Zynga's stock price has fallen 18 percent to $2.30 per share in after-hours trading.

On a slightly more positive note, Pincus said that the recently-released FarmVille 2 has been the company's most successful launch since CastleVille (which debuted in late 2011). The company's With Friends series has also continued to maintain a strong presence on mobile platforms.

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