Pincus Lands on Worst CEO List
Zynga Inc (NASDAQ:ZNGA) announced on Thursday that it will hold a conference to discuss its fourth quarter and full year 2012 results on Tuesday, February 5, 2013. This will come after the market’s close at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
On Thurday, Zynga’s co-founder, Marc Pincus, landed on the third annual Worst CEOs rankings, compiled by Dartmouth College professor, Sydney Finkelstein. The CEO was No. 4 on the list.
According to Computer World UK, Finkelstein’s assessment is determined by questionable executive corporate strategies and governance style–to name a few issues. The list had five CEOs, with Facebook Inc (NASDAQ:FB), Mark Zuckerberg, and Groupon Inc (NASDAQ:GRPN), Andrew Mason, added to the list as two executives who “almost (but didn’t)” make it into the rankings, commented Finkelstein.
This year’s list included the following honorees: No. 1, Brian Dunn of Best Buy Co., Inc. (NYSE:BBY), No. 2, Aubrey McClendon of Chesapeake Energy Corporation (NYSE:CHK), No. 3, Andrea Jung of Avon Products, Inc. (NYSE:AVP), No. 4, Pincus and No. 5, Rodrigo Rato of Bankia.
Finkelstein, who wrote the book “Why Smart Executives Fail,” explained the list’s methodology has three factors, reported Computer World: the firms’ financial performance including stock returns and cash flow; the extent to which the CEO has behaved responsibly; and strategic leadership and corporate governance.
In Pincus’ case, Finkelstein believes the decision to buy OMGPOP in March 2012 for $183 million increases Zynga’s mobile platform offerings, and may have been an expensive technology strategy, as Zynga paid four times OMGPOP’s annual sales, with its flagship game, “Draw Something,” not patented but easily copied.
Zynga’s third quarter 2012 numbers reflected the acquisition with its $52.7 million loss, it also had a $95.5 million impairment charge from the OMGPOP acquisition; this compared to 2011′s third quarter net income of $12.5 million. The company also disclosed that its average monthly unique payers fell from 4.1 million in 2012′s second quarter to the third quarter’s 3 million, as it was “largely driven” by “Draw Something.”
Finkelstein isn’t convinced Pincus should be leading the company. He said to Computer World, “You can be a tremendous entrepreneur, but it’s not the same as being a great CEO.”
Then there’s that little Facebook Inc (NASDAQ:FB) connection.
The professor also believes that Zynga’s business model is too dependent on Facebook. While Zynga’s games can be accessed from numerous social networks, the majority of the company’s revenue is generated through the giant Facebook. In the third quarter, Zynga reported that 84% of its revenue came through the social network. When compared to the same period in 2011, revenue fell from approximately $288 million to $286 million.
With all the negative news in the third quarter, what will investors have to look forward to on Feb. 5?