Shares of Facebook Inc(NASDAQ:FB) fell near
to record lows after its main game provider Zynga Inc(NASDAQ:ZNGA) reported a
loss in its second quarter results on Wednesday and cut its outlook for 2012,
blaming the dwindling interest by the social network's players for its poor
performance.
Zynga's stock crashed by 35 percent and
touched a record low of $3 after the company pegged its earnings in 2012
between 4 and 9 cents a share, down from the 23 to 29 cents previously
forecast.
Get Complete Analysis
on ZNGA, Get
Free Trend Analysis
The maker of `Farmville' reported a net
loss of $22.8 million, or 3 cents a share, compared with a profit of $1.4
million a year ago.
Its adjusted profit, which excluded certain
items, was 1 cent a share, much below the 5 cents expected by analysts.
Revenues for the quarter were $332.4 million, compared the $344.12 million
polled by analysts.
Can ZNGA Bounce back
After Today’s Fall? Get Trend
Analysis
Facebook, which will announce its results
on Thursday, is expected to be hit by Zynga's dismal performance, whose
flagship Farmville game contributes about 15 percent to the Mark
Zuckerberg-owned company. Shares in Facebook fell 7% to $27 in pre-market
activity.
The top-rated social network has been
struggling to regain investor confidence after a hyped-up market debut in May
failed to live up to expectations and its shares have fallen nearly 30 percent
from its inaugural price.
The declining popularity of Farmville,
which accounted for slightly less than third of Zynga's revenues in the
quarter, is being seen as the villain of the piece with the number of players
on Facebook falling to 20 million users from 80 million in March, the social
network's data showed.
Despite a rise in the game maker's daily
active users by 23 percent to 72 million in the June quarter, its average daily
bookings per user fell 10 percent to 4.6 cents. Zynga executives admitted that
a new game 'Draw Something' acquired by the company for $183 million also
failed to deliver according to expectations, though it boosted its base of
monthly players.
Analysts said that though the company had
introduced several new games, it was not reflected in its operating earnings.
CEO Mark Pincus, who took control of the
company on Wednesday, said that changes made to Facebook's site were making it
difficult for players find Zynga's existing games.
Zynga went public in December 2011 on the
back of a renewed boom in internet stocks in the U.S., issuing its shares at
$10 each, but has seen a 70 percent erosion in prices so far. Shares of ZNGA
are down 38.36% to record low of $3.13 in pre-open activity.
No comments:
Post a Comment