Zynga posts loss but signs U.K. gambling deal; shares jump
By BARBARA ORTUTAY AP Technology Writer October 24, 2012 5:12PM
Updated: October 24, 2012 6:23PM
Battered shares of Zynga Inc. soared in after-hours trading Wednesday after the social gaming company posted stronger-than-expected revenue for the third quarter and said it will enter the gambling business.
As expected, Zynga booked a loss in the third quarter due largely to a charge marking down the value of mobile game company OMGPop, which it acquired in March for $183 million.
The company behind “FarmVille” and “Words With Friends” lost $52.7 million, or 7 cents per share, in the July-September period. That’s down from earnings of $12.5 million — break-even on a per-share basis — from a year earlier, when it was still privately held.
On an adjusted per-share basis Zynga broke even in the most recent quarter, matching analysts’ expectations.
Revenue grew 3 percent to $316.6 million. According to FactSet, analysts expected lower revenue of $291 million.
Zynga, which is trying to convince investors that it can revive growth, also signed a deal to offer online poker and casino games, played with real money, in the U.K. It plans to launch those games in the first half of 2013.
The results come a day after Zynga announced that it will lay off workers for the first time. The company is cutting about 150 jobs, or about 5 percent of its workforce of 3,200. It’s also closing studios and killing off some games to cut costs.
In another attempt to appease investors, Zynga also said it will repurchase up to $200 million of its shares. Buybacks increase the value of the remaining shares traded on the stock market and can lift per-share earnings since results are divided among fewer shares.
Shares of the San Francisco-based company jumped 29 cents, nearly 14 percent, to $2.42 in after-hours trading. The stock had closed down 7 cents at $2.13, hitting an all-time low of $2.10 earlier in the day. Zynga’s stock began trading in December after pricing at $10 in its initial public stock offering.