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Facebook, Inc. (FB) Message Board

  • berger500financial berger500financial Oct 12, 2012 10:56 AM Flag

    ZNGA (Zynga, Inc.) accounts for about 14% of FB (Facebook's) revenue. SET FOR OVER 80% NTT.

    ZNGA (Zynga, Inc.) accounts for about 14% of FB (Facebook's) revenue. SET FOR OVER 80% NTT.

    Zynga Drags Down Facebook Shares
    By Leah Powell
    October 12, 2012
    Facebook, Inc. (NASDAQ:FB) relationship

    with Zynga has brought in tons of money due

    to the success of games like FarmVille, but

    along with that, bad news for Zynga is also

    bad news for Facebook. A week ago, Zynga

    revealed its “preliminary financial

    results” a few weeks before its official

    earnings report, not usually a good sign.

    The FarmVille maker reduced its outlook for

    2012 due to several problems like “reduced

    expectations” for certain games, delays in

    launching new titles, and a large write-

    down on its purchase of game maker OMGPOP.

    And, the bad decision to buy OMGPOP has

    also reared its head. Zynga bought the

    makers of Draw Something for $180 million,

    and then a completely predictable thing

    happened: people got bored with the game

    because the word bank never changed, so

    they stopped playing, and OMGPOP lost a lot

    of its value. In the financial results,

    Zynga took a write-down of $85 million to

    $95 million on the value of OMGPOP, more

    than half of what the company paid for it,

    meaning that was definitely a bad deal.

    I side with Analyst Michael Pachter on the

    side of, "we're of the mind that another

    big issue is that the casual gaming market

    is incredibly fickle, which is why people

    are called "casual gamers". People may get

    addicted to tending their crops for a short

    time, but it's incredibly hard to keep

    people engaged when a game is all grind and

    no payoff.
    "This is exactly why I am encouraged with

    Zynga's launch with Facebook (FB) in

    entering Markets such as Russia and Asia

    where the Market Segment contains 10 Fold

    the "Active Users" where MONEY is a key

    motivator for User Retention with the "NEW


    attack. Zynga currently has The Worlds

    Largest Online Poker Community on The

    Inernet and this Market Dominance is only

    going to expand as Facebook (FB) and Zynga

    (ZNGA) enter into the Online World of REAL

    GAMBLING meaning REAL MONEY where The House

    ALWAYS WINS," said RL Berger of BERGER 500

    Zynga is also a large part of Facebook's

    revenue stream, accounting for about 14% of

    Facebook's revenue in the first half of

    2012. In fact, Facebook's stock dropped 3%

    right after Zynga made this announcement.

    Zynga has released its "preliminary

    financial results" well in advance of its

    official Q3 financial statement and that in

    itself is a red flag. Zynga is saying that

    the company has earned about $300 million

    Q3 this year, which is down from $332

    million last quarter.
    RL Berger also stated that, "Accordingg to

    The World Gaming Council's projections that

    Zynga given the current structure will be

    on pace to deliver in excess of 80% of

    Facebook's (FB) revenues in 2013. The

    exciting part of the equation is that this

    does not account for the push by Mark

    Zuckerberg to link up with Russia that has

    Two seperate Social Networks that are each

    much larger then Facebook in Active Users

    and then we add Asia into the Online Gaming

    Business Model can easily blow that 80% out

    of the water. Zynga(ZNGA) is positioned and

    poised to be the World's Leading Online

    Casino and Sports Book in just a few short

    quarters. ZNGA has the potential to be

    worth $100's of Billion's in Market

    Capitalization over the next year. As

    previously stated. Do not expect much from

    Zynga until 2013 until the Business Model


    Sentiment: Strong Buy

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