Zynga’s ongoing struggles are evident in its Ireland division, which has a much higher job loss ratio (60%) when compared to the global average of 18%. The latest accounts from the game maker reveal that 22 employees will depart from Zynga’s Dublin operation, representing almost three-fifths of the workforce there.
Lowering costs to stay relevant
Zynga’s latest numbers, revealed in the Irish Independent, show a drop in overall revenues by $100 million. Citing accounts filed by the firm, the Irish Examiner says the losses for the company increased from $5.14 million to $86.7 million.
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“There is a decline in revenues driven by a global decrease in sales year over year. The decrease in revenue is mainly due to a decrease in user-pay bookings as well as revenues from certain games decreasing,” the directors’ report states.
In May, Zynga came up with a cost reduction plan including lowering the workforce by around 366 employees or 18% of the global workforce. Other cost reduction measures include slashing expenditure on data center infrastructure, the directors report said.
Will Zynga disappear?
Zynga will report its fiscal third-quarter earnings on November 3rd. Wedbush’s Michael Pachter expects the game maker to beat the consensus “driven primarily by its slots games.” Pachter has an Outperform rating on the game maker with a price target of $6.
Pachter expects the gaming firm to report bookings of $170 million and EPS of $(0.01) compared to the consensus estimate of $170 million and $(0.01). Pachter believes gains from the slots will offset the decline in Zynga Poker and the FarmVille games.
Zynga witnessed a 10.6% drop in short interest last month. From 34,138,113 shares on September 30, the short interest dropped to 30,536,647 on October 15. Total short interest represents 3.9% of the floated stock.
Last year, 24/7 Wall St prepared a list of companies that it expected to disappear this year. Zynga was there in the list among other big names including BlackBerry, Time Warner Cable, DirecTV and Shutterfly.
Zynga, which was founded in 2007 in San Francisco, went public in December 2011 at $10 per share. In pre-market trading Wednesday, Zynga shares were up 0.42% at $2.40. Year to date, the stock is down over 12%, while in the last month, it is up over 2%.