By Sarah E. Needleman
Zynga Inc. reported a significantly wider loss for the holiday
quarter and projected lower-than-expected revenue for the current
period amid additional investments by the game maker in search of
its next big hit.
Shares of Zynga, which have fallen 45% over the past year, fell
another 10% in after-hours trading.
Zynga's shares peaked in early 2012 following the release of
popular Web-based games tied to Facebook like "Farmville," but
they've plummeted since then as the company has failed to produce
more blockbusters despite shifting focus in recent years to mobile
games that consumers now prefer.
"In casual mobile gaming, you have to be a hits factory," said
Daniel Ernst, an analyst with Hudson Square. "Outside of the really
big hit 'Farmville,' they've struggled to repeat that."
Zynga said it plans to release between six and 10 new titles
this year as well as branch out into two new
categories--match-three puzzle and action-strategy games. "The
profit pools are very deep in those places, and we haven't had
participation in them," said Clive Downie, chief operating
officer.
One of the new action-strategy titles, "Dawn of Titans," was
made by NaturalMotion, a studio based in the United Kingdom that
Zynga acquired last year for $527 million in cash and equity.
Mr. Downie said Zynga will continue to invest in beefing up its
mobile presence in 2015. "We still have lots to do," he said.
"We're not saying the transition is over." Chief Executive Don
Mattrick in November called 2014 a transition year for Zynga in
which the company was investing for growth.
For the three months ended Dec. 31, Zynga said it lost $45.1
million, or 5 cents a share, compared with a loss of $25.2 million,
or 3 cents a share, in the year-earlier period. Excluding
stock-based compensation and other costs, Zynga said it had a loss
of less than a penny, narrower than the loss of 3 cents a share in
the year-ago period and in-line with Wall Street estimates.
Revenue rose to $192.5 million from $176.4 million. Analysts, on
average, were expecting revenue of $201.1 million, according to
Thomson Reuters.
Zynga said that for the current first quarter, it expects
revenue between $155 million and $165 million, below the average
analyst estimate of $201 million. The company expects bookings, or
sales of in-game goods and ads, between $140 million and $150
million.
Zynga said Thursday it would shutter its Beijing office and cut
71 jobs after launches of the mobile game FarmVillage failed to
meet expectations. Previously, the company said a new version of
"Poker" that came in the third quarter also underperformed. Other
recently released titles include a new version of "Words With
Friends," "Looney Tunes Dash!" and "NFL Showdown."
The game maker said it expects to complete the Beijing closure
by July and record pretax charges of $3.1 million, including $2.5
million in severance and employee costs, in its quarter ending in
March.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
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