Zynga Has a Bad Q3; Writes Down OMGPOP Assets

Zynga is expected to reveal its earnings for Q3 2012 on October 24, but it gave investors a sneak peek by announcing preliminary financial results on Thursday.

It has projected revenue in the range of $300 to $305 million, with bookings down to $250 to $255 million for the quarter ended September 30, 2012. It also expects to book a net loss of around $90 to $105 million. Most of the loss can be attributed to a asset impairment charge related to its acquisition of OMGPOP, the maker of Draw Something, for about $200 million earlier this year.

Following the worse than expected quarter, Zynga has also lowered its full year projections, with projected 2012 bookings down to $1.085 to $1.100 billion, primarily due to reduced expectations for certain games, and delays in launching other new ones.

Mark Pincus, Zynga’s CEO, said:

“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. 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. At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry. These actions support our strategy to transition from being a first party web game developer to a multiplatform game network. We remain optimistic about the opportunity for social gaming and the power of our player network of 311 million monthly active users. When we offer our players highly engaging content, they respond. FarmVille2 has been our most successful launch since CastleVille in terms of daily bookings, and we now offer 3 of the top 5 most popular mobile games in the U.S. in terms of time spent according to Nielsen.”

Zynga’s stock price dropped nearly 12% following the press release, bringing its market cap down to $1.9 billion, nearly 15% of its all time high.

via Zynga

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