It would appear that Zynga is trying to beat their employees to the punch and have started letting them go. In all, Zynga let go of 5% of their workforce yesterday, probably in a cost savings measure. It all stems from a rapid decline in profit, detailed in today's SEC filing for Quarter 3 2012. While their revenue numbers were up over estimates, the $316 million was not enough to keep them from losing almost $53 million for the quarter. This brings their total to $160 million in losses for the year so far.
This loss is the culmination of lackluster game announcements and copyright lawsuits, plus employees who need to be bribed to stay, though leaving may have been the better option. Even with all of these problems, somehow the market did not respond accordingly. In fact, the stock price went the other direction from last quarter, and went up. When your price is in the $2 price range, however, it isn't that big of a swing.
Zynga's CEO and founder, Mark Pincus, said in the investor release,
While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming.
We're implementing a number of steps to drive long-term growth and profitability. The successful launches of FarmVille 2 and ChefVille in the third quarter demonstrate that when we develop great games, our large player audience engages. It's more clear than ever that along with search, shop, and share, play is a fundamental pillar of the Internet, and Zynga continues to be the leader.
Maybe, at some point, their purchase of OMGPOP, or the possibly upcoming Draw Something TV show, will help them get back on track. They have their work cut out for them with EA gunning for them, plus Stan Lee's entry into mobile gaming.
What do you think? Can Zynga, the former kings of social gaming, turn it around and compete in the now fast-paced mobile and social gaming industry? Let us know in the comments section.