Shares of Zynga (ZNGA) are bouncing after the company announced Microsoft's (MSFT) Xbox chief, Don Mattrick, would be taking over as CEO. Former Zynga CEO and founder Mark Pincus will retain the titles of chairman and chief product officer. Together Pincus and Mattrick will report directly to Zynga's board.
While a change at the top of Zynga is certainly justified with shares having lost nearly two-thirds of their value since the company went public, it's unclear how a partnership consisting of a new hire and Pincus will work, particularly since Pincus retains 61% of company voting rights.
Beyond a now confusing organizational chart there's questions as to whether or not a former Xbox head is the right guy for Zynga as it struggles to survive. Mattrick had been under fire for what some regard as a bungled roll-out of the new Xbox One. Hardcore gamers were alienated by the lack of focus on gaming and need for the unit to be on-line at all times. Though Microsoft was quick to fix some of the more vexing issues there are still privacy concerns related to the new Kinect unit.
Regardless of how Mattrick became available to Zynga there's a question of how his experience fits with what the company needs. As Zach Karabell of River Twice Research notes in the attached clip there's little apparent overlap in the skill set required to create gaming hardware for Microsoft and coming up with a workable business model for Zynga. Broadly speaking both the Xbox and Zynga make game-related products. That's where the similarity ends.
The most obvious reason for Zynga's pop on the hiring of Mattrick is the idea that any change at the San Francisco gaming company would be an improvement over what it is doing today. Unfortunately for a company with a billion in cash and no operating prospects bringing in a new CEO just makes it more likely that Zynga is going to burn through its money before declaring defeat.
- Investment & Company Information
- Mark Pincus
- Don Mattrick