Zynga to write off up to $US95 million over OMGPOP acquisition
7th Oct 2012 | 22:53
Time to Draw Something sad?
It seems that social gaming company Zynga's decision to spend $US180 million (£110 million) on acquiring one-hit wonder developer OMGPOP hasn't quite worked out as planned. The company has announced its intention to write off up to $US95 million (£60 million) from the deal.
Zynga's third quarter preliminary financial report broke the news, while showing that the quarter hadn't been quite as successful as the company would have hoped.
While Zynga earned between $US300 to $US305 million (£185-£189 million) in earnings, that wasn't enough to stop the company from reporting a net loss of between $US95 to $US105 million (£60-65 million). It forced the company to lower its full year expectations.
This follows on from the first half loss of $US108 million (£68 million), which the company blamed on Facebook's poor public offering
Share price plummets
Zynga's share price took s a significant tumble following the news, dropping around 22 per cent in after-hours trading. The closing share price of $US2.21 is but a fraction of its $US10 debut.
Zynga CEO Mark Pincus used a company blog post to try and rally the company. He plans to turn the current disappointing results around by "investing in other genres like casino where we already lead with Zynga Poker and blue PVP, a category we pioneered with Mafia Wars, and now have the opportunity to reinvent with the industry's best talent here at Zynga."
It's far from the end of days for the company though. With the launch of Farmville 2 and Chefville, as well as classics like Words with Friends, the company is still attracting 311 million monthly active users.