Zynga Inc (NASDAQ:ZNGA)’s recent earnings report was a little better than expected, but its guidance was worse than expected. As a result, Sterne Agee analysts lowered their estimates and said they think Wall Street’s estimates for 2014 “seem overly optimistic.”

Zynga

Markets react to Mattrick’s commentary

Recently Don Mattrick took the helm of Zynga Inc (NASDAQ:ZNGA), and Wall Street appears to have liked the comments he made. However, Sterne Agee analysts Arvind Bhatia and Brett Strauser say his comments were “longer-term in nature” and focused more on tailwinds for the industry as a whole rather than for Zynga specifically. Meanwhile the game maker’s own business continues to decline, so the two analysts reiterated their Neutral rating on the company’s stock.

They noted that although the company posted growth in Farmville 2, Zynga Poker and Words with Friends, bookings for most of its other games are declining. They say the company’s positive results were boosted because of its continued cost cuts.

Zynga’s Q4 guidance a concern

What they were most concerned about was Zynga Inc (NASDAQ:ZNGA)’s fourth quarter guidance. Trends are expected to fall off even more quarter over quarter, although more slowly than in the third quarter. Also the fourth quarter is expected to bring higher legal costs and marketing spending.

The company guided for fourth quarter bookings of $130 million to $140 million, which is significantly below consensus of $163 million. The midpoint of the guidance suggests bookings will fall 11% while adjusted earnings falls $27 million.

Sterne Agee lowered their fiscal 2013 adjusted earnings estimate to $30 million from $32 million and raised their fiscal 2014 bookings estimate to $579 million. They lowered their fiscal 2014 estimate for earnings to a loss of 9 cents per share, compared to their previous estimate of a loss of 7 cents per share.

Zynga Inc (NASDAQ:ZNGA) also hired Clive Downie as its new chief operating officer. Sterne Agee sees his hiring as a positive for the game maker.