Online social games developer Zynga Inc. (ZNGA: Quote) said late Thursday that it expects to report a net loss for the third quarter, reflecting weakness of certain games in its web "invest and express" category as well as a hefty write-down related to its purchase of mobile game maker OMGPOP.
The company also lowered its full year 2012 outlook, mainly due to reduced expectations for certain web games including The Ville, and delays in launching several new games.
Zynga shares are currently losing 18.65% in after hours trading after closing the day's regular trading session at $2.82, up 2 cents. The shares, which reached their peak of $15.91 on March 2, are currently trading far below their December $10 initial public offering price.
San Francisco-based Zynga said it expects to report revenue of $300 million to $305 million and a net loss of $90 million to $105 million, or $0.12 to $0.14 per share.
On an adjusted basis, the company expects to report a net loss of $2 million to $5 million, or break-even to loss of $0.01 per share.
Zynga said the third quarter results will include an estimated impairment charge of $85 million to $95 million related to the intangible assets acquired in connection with the company's purchase of OMGPOP earlier this year.
Analysts polled by Thomson Reuters currently expect the company to post break-even per share on revenue of $275.90 million for the third quarter. Analysts' estimates typically exclude special items.
Bookings for the third quarter are expected in the range of $250 million to $255 million.
"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 Mark Pincus, CEO and Founder of Zynga. "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."
Zynga now projects bookings for the full year 2012 to be in the range of $1.085 billion to $1.100 billion, compared to its previous expectations of $1.150 billion to $1.225 billion.
The company cut its full year 2012 outlook for 2012 adjusted earnings before interest, tax, depreciation and amortization to a range of $147 million to $162 million from its previous outlook of $180 million to $250 million.
Zynga is the world's largest developer of online social games. The company's offerings include FarmVille, CityVille, Words With Friends, CastleVille, and Zynga Poker.
Zynga's games are popular in social networking sites such as Facebook and on mobile platforms. The company offers games for free, deriving its revenues through sale of virtual goods that enhance gaming experience, as well from advertising.
The company's preliminary third quarter results follows a disappointing a second quarter earnings report in July. It also came at a time when Zynga is facing an exodus of senior executives, and is embroiled in a legal battle with Electronic Arts Inc. (EA).
Zynga will release full financial results for the third quarter on October 24.
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by RTT Staff Writer
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