Zynga plans to write off OMGPOP, lowers its revenue forecast for Q3

The creator of Farmville, Zynga released the guidance for third quarter earnings on Thursday, citing lower revenues for the term due to lack of interest in its online games. Moreover, the company also announced that it will write down in tune of $95 Million as impairment charges on its recently purchased game developing company OMGPOP.

Zynga CEO Mark Pincus stated on a blog that its online games are receiving lacklustre response from users and that is effecting the release of its upcoming games.

“The reduced performance of some of our live Web games is continuing to impact results and we have several new games which are at risk of launching later than expected,” CEO Mark Pincus wrote late Thursday in a letter posted on the company’s blog.

The CEO was direct in saying that the latest acquisition has not been cost effective to the company, which is already cutting operational costs to boost revenues. San Francisco-based Zynga dropped its full-year expectations for “bookings,” a non-GAAP measure of sales and deferred revenue. It cited tepid receptions for new games, including “The Ville.”

The company bought OMGPOP in March this year for the sole reason of increasing profitability. However, the developer’s blockbuster game ‘Draw Something’ slid down in popularity and use immediately afterwards.

Zynga announced a loss per share of one cent to a breakeven for the third quarter. That would align with the general consensus of a breakeven by analysts, polled by Thomson Reuters. The company also announced lowered revenues of $300 to $305 Million, which if true will beat the analysts forecast of $275.9 Million.

Zynga now expects full-year bookings of $1.085 billion to $1.1 billion, down from its estimate of $1.15 billion to $1.225 billion in July.

The stock was trading at $2.82 a pop on Thursday, rising just a fraction. Zynga went public in December last year with a face value of $10.

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Posted by Usman Khalid on Oct 5 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.