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When The Gamblers Run Out Of Money

|Includes: Zynga (ZNGA)

A loud outcry followed the Zynga - ZNGA - Conference Call on Thursday after the bosses said they will not pursue online gambling.Investors/Traders dumped shares by the millions as they stampeded to the exits.Was this a bad move by management or a calculated one in order to attract a future suitor? The abrupt about-face on the gambling issue leads me to believe that a detailed discussion about the future led to this decision.The hiring of Don Mattrick was the first step in getting the company's focus back on the games on which the company was founded.The UK gambling is still on so not all is lost on that front.With so many forms of gambling still available in the U.S.,like the lottery and small casinos,the time may be too early for Zynga to plow ahead for now.The new CEO will be learning the ropes as he navigates the choppy waters of online gaming.Throwing him into the gambling pit this early may be unwise in the short term.The future direction may eventually head that way but for now getting back to the basics is the call.One of the worst things gamblers hate is running out of money.Zynga still has 1.27 billion in cash so that is not a problem for now.

Disclosure: I am long ZNGA.