Zynga Gets Acquired
Prediction: Zynga (ZNGA) has had a rough 2012, that's for sure. The company has lost nearly three-quarters of its value, important executives have left the company and Facebook recently distanced itself from the game maker.
CEO Mark Pincus still owns a significant portion of the company (50.15% of the voting rights as of August), despite having sold off significant amounts of stock in the initial public offering and subsequent offering earlier this year.
Zynga, best known for its -Ville games and Words With Friends is trading at extremely cheap levels. It has almost enough cash on hand (about $1.6 billion at the end of the third quarter) to equal its market cap ($1.8 billion). Zynga is still generating cash flow from operations -- $30.1 million in the third quarter -- and it owns a valuable piece of real estate, its San Francisco headquarters.
Pincus retweeted a tweet that said going private should be an option for Zynga. Given the amount of cash it has on hands, it's not out of the realm of possibility to see a management-led buyout on this one.
Review: Well, Zynga didn't get acquired; it's still publicly-traded, so epic fail on that one. However, Mark Pincus stepped down from his position as CEO of the San Francisco-based social gaming company earlier this year, replaced by Don Mattock.
Zynga has still had a tough time of trying to replicate the success it had with Farmville and a few other games, but investors have rewarded the stock this year, sending shares up more than 70% year to date.
Zynga's most recent quarterly results, its third-quarter, still shows the company has a lot of work to do. Revenues fell 36% year-over-year to $203 million, and bookings fell 40% to $152 million.
"We believe our core franchises, Zynga Poker, FarmVille and Words With Friends can be evergreen in terms of consumer interest and we are more effectively resourcing these teams with talent from inside the company," Mattrcik said in his prepared remarks talking about Zynga's third-quarter results. "We are focused on growing these franchises and our teams are showing early progress on better execution, predictability, franchise vision and game quality. Our leaders are working to compete more aggressively and to develop thoughtful growth plans for these core assets in fiscal year '14."
Grade: D (Zynga didn't get acquired, but Pincus did leave. I give myself a smidge of credit, but not much)