Zynga has replaced Apple this week on the headlines as it pertains to companies bombing in their earnings reports.
The social game services king posted earnings per share of $ .01, which is a gigantic miss when you consider the consensus $.06 earnings estimates. Zynga also showed revenue of $332.5 million, well below $344 million estimates. Net loss was $22.8 million for the second quarter of 2012 compared to net income of $1.4 million for the second quarter of 2011.
The news was perceived to be so negative, that shares of Zynga have since plunged more than 40%.
So what went wrong for Zynga? Competition from Facebook and delays in new game launches are being blamed.
We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something.
“The company achieved some significant milestones in the quarter,” said Zinga chief Mark Pincus. “We also faced new short-term challenges which led to a sequential decline in bookings. Despite this, we’re optimistic about the long-term growth prospects on mobile where we have a window of opportunity to drive the same kind of social gaming revolution that we enabled on the web.”
