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Zynga releases Q4 report early, buying game developer for $527M

  • Zynga (ZNGA) has released its Q4 report a week ahead of schedule. The company had Q4 bookings of $146.7M (-44% Y/Y), and EPS of -$0.03. That beats a consensus of $141.1M and -$0.03.
  • Zynga also announces it's buying leading mobile game developer NaturalMotion (responsible for hit titles such as CSR Racing and Clumsy Ninja) for $527M - $391M in cash and 39.8M shares.
  • Also: Zynga is cutting another 314 jobs (15% of its workforce). It expects to record pre-tax charges of $15M-$17M, and achieve $33M-$35M in annual cost savings.
  • Zynga expects Q1 bookings of $138M-$148M and EPS of -$0.01 vs. a consensus of $145.6M and -$0.02. It expects 2014 bookings (boosted by NautralMotion) of $760M-$810M and EPS of $0.01-$0.03 vs. a consensus of $629.1M and -$0.04.
  • Shares remain halted.
Comments (16)
  • LYogi
    , contributor
    Comments (2196) | Send Message
     
    she's going up after the halt!
    30 Jan, 04:16 PM Reply Like
  • mausam.duggal
    , contributor
    Comments (14) | Send Message
     
    Not so sure
    30 Jan, 04:23 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1045) | Send Message
     
    The cash is the reason a lot of people felt safe holding Zynga. Zynga has a history of making expensive acquisitions that lead nowhere (see, for example, OMGPOP). So I am not sure how the market will take this.
    30 Jan, 04:28 PM Reply Like
  • inkyx
    , contributor
    Comments (384) | Send Message
     
    Philip, it's not just the cash, which is a pretty big pile, it's the new CEO and leadership. That leadership makes a big difference in any company, and an amazing difference in a company with no debt and a huge cash pile. Amazing cash pile + CEO = new company direction and lots of potential, which is what this dreamers market is all about. Your mistake is to equate the new with the old and the old acquisition with the new. I'd jump ship on your short and try another company that doesn't have such a big base and great chart pattern on the upside.
    30 Jan, 09:46 PM Reply Like
  • 993c4
    , contributor
    Comments (7) | Send Message
     
    40% of cash reserves gone. new "floor" for the stock is $1.20
    30 Jan, 05:20 PM Reply Like
  • inkyx
    , contributor
    Comments (384) | Send Message
     
    Look at the charts, 993, the floor been established for a very long period of time. It was not based on just cash. Potential, which is being realized, is also built into the price much like every other listed company. The stock market is forward thinking. And ZNGA is a company with huge potential. You shorts are 200% behind longs. Hahaha. Wealth is relative, and being on the wrong side of a trade has gotta hurt. Hahaha.
    30 Jan, 09:59 PM Reply Like
  • haleiwahu
    , contributor
    Comments (3523) | Send Message
     
    Spending $391mil on a company (plus Z stock) depletes about 1/2 your cash flow for only a max. $12mil per month return can be challenging to explain to your stock holders. o well, another ZNGA bad choice.
    30 Jan, 05:25 PM Reply Like
  • inkyx
    , contributor
    Comments (384) | Send Message
     
    hal, your never ending negativity on ZNGA I hope makes you money. We're here to make money, right. I'm not the smartest person, but I'm smart enough to know whether someone is smarter than I am. And Don and company are easily smarter than you and I, whether by raw IQ or just proximity to the action. It's that simple. Bet on smart people.
    30 Jan, 11:19 PM Reply Like
  • haleiwahu
    , contributor
    Comments (3523) | Send Message
     
    We'll always have fun keeping score on them now won't we Ink :D
    2 Feb, 11:42 AM Reply Like
  • ATX
    , contributor
    Comments (74) | Send Message
     
    You sure? Last time Zynga did an acquisition of a game developer and they shut that department down completely, look:

     

    "Zynga, the biggest maker of online social games, took a writedown of $95.5 million in the third quarter on the value of the mobile-app maker, which it bought for $180 million."
    Source from bloomberg Mar 1, 2013: http://bloom.bg/1fmBjVV

     

    Acquisitions show incompetence and weakness in Zynga, when the new CEO ditched the plans for online real money gambling for Zynga, it was a no brainer to dump, if it does go up, thank the Market and sell, because this Acquisition is bigger than the last one and it accounts for half of their cash, same thing can happen to this acquisition where they take a big write down later. Think about it, if they are competent, they would make their own games instead of buying other company, what if the new CEO got friends at the other company? That could mean this acquisition is just the higher up doing a favor for a friend and burn through Zynga's balance sheet while they still have money left.
    30 Jan, 06:09 PM Reply Like
  • inkyx
    , contributor
    Comments (384) | Send Message
     
    ATX, like you've run a billion dollar company to comment on whether an acquisition shows incompetence and weakness? Ok, make me a believer. Show your brilliance so we may become more enlightened investors. ZNGA will do amazing things in this new gaming space. My suggestion is short some other stock, but you have to know it's very risky to short a stock near its lows, I hope.
    30 Jan, 11:21 PM Reply Like
  • Jones1934
    , contributor
    Comments (48) | Send Message
     
    The point is Zynga is on a roll to a steady growth and is now a long term hold. New pps high in near future due to Facebook link, RMG and an ever increasing earnings beat. Very Positive stuff. I own 12000 shares at cost average of 3.666. Give the Devil his due and show me the money. Go big dog go. This is going to be a fun ride. High Five soon. Popped that big Znga sore on my Scottrade account. HA! Green time for my new cash cow!!

     

    LOL tj
    30 Jan, 07:50 PM Reply Like
  • inkyx
    , contributor
    Comments (384) | Send Message
     
    Way to go Jones. I agree. These shorts that don't tell anyone their position get tiring. I've got 41k and today's afterhours was icing on a giant cake---(I'm also long YRCW from way down there).
    30 Jan, 10:05 PM Reply Like
  • mykecorleone
    , contributor
    Comment (1) | Send Message
     
    im looking at $GRVY, GRAVITY Co, for a sympathy play off $ZNGA news
    30 Jan, 07:51 PM Reply Like
  • Karen Johnson Furman
    , contributor
    Comments (6) | Send Message
     
    Wow. inkyx, I hope you don't have too much invested in this company, wait until the 1st qtr report for this year. Znga is known for it's poor choices and even poorer customer service, you can't expect good things from a company who does business that way. They acquire things and then dump them, because it's not profitable? Why acquire it in the first place? It makes no sense, NONE. They've just about abandoned Facebook (which had a very good day, by the way) and who is "rowing their boat" doesn't really matter, they have the rep and they have the history. You'd think you worked or were friends with them, my advice, get rid of it while you can, it's a clunker.
    31 Jan, 05:02 AM Reply Like
  • haleiwahu
    , contributor
    Comments (3523) | Send Message
     
    See . . . Even new voices chime in with a positive position that Z is fun to poke at
    2 Feb, 11:48 AM Reply Like
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