Zynga Inc (NASDAQ:ZNGA) announced its earnings for the last three months of 2012 today. The company reported earnings per share of $0.01 for the period, bringing  in revenues of $311 million during the period. The social gaming company had a tough year in 2012, Zynga was removed from a preferred partner status at Facebook, and saw its stock fall by a huge margin.

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Zynga Inc (NASDAQ:ZNGA) stock performed well in anticipation of the delivery of this earnings report. On today’s market the company’s shares finished up 7%. Much of the boom in price today may have been due to positive whisper numbers that were being circulated throughout the day.

In the same three months of 2011, the company recorded earnings per share of 4 cents, after some items were removed. In that period the company took in revenues of $311 million. Analysts had expected the company to report a loss of 4 cents per share for the fourth quarter of 2012.

A report from Bank of America Corp (NYSE:BAC)’s investment banking unit, Merril Lynch, released in the hours before Zynga announced its earnings, put a price target of $3.40 on the company’s stock, and raised its outlook on the firm from underperform to buy. In the hours before the market closed, Zynga Inc (NASDAQ:ZNGA) was trading up by around 7%, at over $2.70 per share.

That report raised the outlook for the company, but still doesn’t predict any huge earnings growth in the short term. The firm’s estimates for 2012 earnings are 2 cents per share, while Bank of America Corp (NYSE:BAC) analysts expect the company to post 9 cents per share losses in 2013 and 2014.

Zynga Inc (NASDAQ:ZNGA) is a better bet for several reasons according to the report. The firm is expected to bring in $200 million in annual gambling revenues going forward, while mobile revenue is expected to stabilize at $150-200 million. There is a downside due to bookings priced into the model. Bank of America analysts do not necessarily think Zynga can continue to perform in its tradition Facebook Inc (NASDAQ:FB) based social gaming market.

Zynga Inc (NASDAQ:ZNGA) released several new games in 2012, and much of the subsequent analysis on this earnings report will concentrate on how they performed individually. One of the firm’s biggest releases was Farmville 2. The social game looks to have disappointed in both players and revenue, but there are signs that point to the possibility of a surprise from that sector.

Another important development for the company was the increased attention given to the possibility of earning revenues form online gambling. The company’s Zynga Poker is one of the most enduring titles, and the prospect of monetizing it through legalized gambling is an interesting one. Online poker has, of course, not yet been legalized.

There is a risk factor attached to that strategy, and arguments like, “the States can’t afford to forgo the revenue”, and “lobbyists will have their way,” have not always indicated a 100% successful scenarios in the past. They have almost never offered a completion date, preferring open ended vague predictions. Zynga Inc (NASDAQ:ZNGA) accounts are not, however, open ended, they release earnings quarterly.

Updated: Zynga Inc (NASDAQ:ZNGA) shares rose to 7.66% to $2.95 in after hours trading.