Zynga forecasts bigger than expected loss for Q2, shares plunge after hours

Zynga forecasts bigger than expected loss for Q2, shares plunge after hours
Despite reporting a surprise profit in the latest quarter, shares of game publisher Zynga fell 9% after hours when the company forecast a wider than expected loss for the current quarter. The stock was trading at $3.05 in extended trading, down about two-thirds from the highs it hit last year when the company purchased OMGPOP for $180 million, mainly to acquire what was then the hottest mobile game in the country, Draw Something. But Zynga ended up purchasing the company and the title at the peak and the stock started dropping.

For the first quarter, Zynga posted profit of 1 cent a share while analysts expected a loss of 4 cents. Company CEO Mark Pincus said that things should pick up for the company later in the year, although he said during a conference call, "We know that 2013 is a year of transition. We continue to expect non-linear, uneven results." The company is looking to replace those who once played its games on a desktop, with those looking to play games over a smartphone. But some analysts say that the mobile market doesn't offer the chance to make a ton of money. Mike Hickey, an analyst with National Alliance Capital Markets said, "The majority of their games are lower-monetizing experiences on mobile platforms. Certainly they've attracted a large audience but it's hard to get much money from that audience."

Over the last year, Zynga's monthly players have dropped from 292 million to 253 million, while the number of monthly paying customers has dropped from 3.5 million to 2.5 million. 22% of its revenue comes from mobile, up from 12% last year. And with that rise comes hope that Zynga can do better with a stronger focus on mobile. Even Draw Something is back. Draw Something 2 has leaked and a televised version of the game is about to start in the U.K. with a version for the U.S. in the works.

source: Reuters

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