"With $1.6 Billion in Cash, Zynga Is Now Worth Less Than $750 Million to Investors"
This piece was for right around $3/shr. With current PPS, somewhere around $700 Mil right now.
With revenues the last 3 years of 600 Mil, 1.1 Bil, and 1.3 Bil respectively.
1st qtr revenue of 264 Mil, with 2nd Qtr range of 180-190 (332 same qtr last year).
So 1st year of revenue decline after 3 years of growth.
Question is can they turn it around. They have done it before, before going public. Need an innovative game, and an innovative plan for the on-line gambling. Mobile gaming is not going away.
Maybe... LOL, but there are multiple factors in play beyond turning revenue northward, although that would certainly help.
They seem to be on a mission to only have profitable games that they believe can be franchises that last deep into the future even in a crowded field.
If they were only supporting Farmville2, Words With Friends, Hanging With Friends, Scramble With Friends, Running With Friends, and Poker and Casino the revenue picture would not improve but the profitability of the company could be dramatically improved and each of these titles have staying power.
New development could be limited to "mid-core and RMGs" where the $ per user is multiples higher than the traditional freemium based games.
Continue to decrease the workforce and maintain offshore, India, and the cost structure begins to change as well.
Look they are close... All the negative press aside, this company has solid assets and a few hard choices for them could position them to be in a position to throw off profit for decades to come.
Dumping employees and accepting that you are not going to "change the world" is tough but it looks like John Doerr, and Jana Partners are deep into getting the company on the right path and they are doing it before the company had a chance to burn up the cash asset...
Now they really need to get Running With Friends on Android.
The art and science of "true" book value. First the science, add all cash and hard assets like real estate minus liabilities.
Next the art. You must assign a value without a mark to market to assets that may be unique to the company... What is Farmville2 worth? What is Running With Friends worth? What is Zynga Poker worth? What are gambling patents worth? What is the UK gambling partnership worth? This is the tricky part.
Lastly, what is the measure of safety to the net cash in the company? Are they going to use it in the next 12 to 18 months? How much and for what? Are they going to add to it? How much and when?
Occasionally you will see a company trading below current book because the market believes the assets, mainly cash, will disappear if the company is posting losses or is expected to in the future.
I hope that helps you.