Don may have felt that selling was the right thing to do but the founder felt differently. I am afraid that if pride gets in the way of business sense, we may be headed for more disappointment.
how MP delivers the CC report and forward guidance will tell you If the guy was lucky to have the success with his one trick pony and FB years ago and thus a true phony or if he does a good job with appropriate action plan and handles it like a turnaround professional. He is going to have to provide more than meager numbers to move the needle here.
Wouldn't be surprised. How much will they pay us will be the issue. The fact that retail owns very little at this time, means our vote is insignificant.
When a company runs out of alternatives and hoards a billion and change in cash with bleak outlook, choices are less and less. Eventually funds begin a campaign to move this on. They are slowly picking up shares to become more forceful with the company. MP still has 60% of control but will need to listen if things don't turn soon. The funds start moving in so they cash out on an early sale. What other reason would they have for taking such a large hold on this stock for now unless they see a possibility to make fast money on a flip?
The sharks are circling ZNGA for the kill. ZNGA has managed to corner itself and the sharks know this. Getting very close. The funds must see something retail is not because retail is selling their stock to the sharks.
They are sitting on a billion plus and other assets like real estate etc, essentially reducing the cost by a buck and change which means the acquiring company gets all that in their books after the sale. The net cost to acquire would be less than the $4 and change. More like $3 per share. Some would pay to get into this space if they have the fortitude to do something big with this.
Remember the competition is not standing still and they have plenty of advertising compaigns to cover themselves even if their games are not 100% up to par. Plus they have established themselves with a good reputation so people are more likely to download their games just on mere past experience. Frankly I think MP is approaching checkmate with this company. Hopefully he reliazes the crowded space he has entered and finds a buyer that has more to offer ZNGA insofar as marketing and distribution and gets this off his hands for a $1.5 more and be done with this and us. He waited too long to transition to mobile and now it's going to take a Herculean effort to turn this around by himself. He no longer has a one pony trick show to peddle.
What calculation can possibly tell you that this will be over 6? You anticipate this to be over 6 on speculation but you have no idea and niether does ZNGA management know what kind of revenue this will generate in 6 months. They have little marketing to sell their work and this contributes to the problem the stock is experiencing. If competition comes out with another winning game, we are done here because they put more money in marketing and that will put the lid on ZNGA.
They better come up with something gullible for larger funds to accept. Partnering with a marketing and distribution company could get us to 3.5 by itself.
It's like an exercise in futility. Spend all that money to develop a new game, launch it and then tell no one. Come the conference call you take credit for developing and launching a group of new games but few know about it and very little effort to let others know. What gives? Is this a set up?
Just maybe they are taken out before then. This is a company that is stuck in neutral. Marketing initiative is lacking. Creativity is mediocre and I am being generous by other folks' standard that follow the stock. It will take a great deal of effort to move this and why I am of the opinion that they need someone else to get it done.
It's poor performing because of management has not done DD on there moves. Plan A and plan B at a minimum incase A does not work out. Very shallow thinking in my books. Even in my days as a corporate manager in Fortune 500 companies, have I ever seen such shallow thinking. They run this like grads out of school. I was not that impressed with DM. He has been very lucky in the past to say the least.
This is what ZNGA is worth with Pincus at the helm with current situation. It's going to take a lot more than reducing some headcount and introduce a few games that can't hold top 20 out of the gates to keep this stock going higher. If management can't figure this out on their own, we are in trouble.
They have lied to their shareholders and continue to take value from investors. Lie to us about having the right staffing count and then comes back and announces a layoff as soon as they get a little pressure. Now they want to take the rest of the year to execute the plan. Meanwhile unloads more liability on the company. They tell us 3 to 4 quarters for a turn around. The list grows. Only reason I hang around is to cash in on a sellout just like major funds are waiting for. They are running out of time and excuses.
As far as Europe is concerned, I have been on tour through France and now Italy (7/1-7/25) and can tell you it is packed with tourists, many Americans. It has been swelling hot but people made their bookings early on when oil was cheap and the Euro was lower and now they are here and spending at every place I go. Lines to get into resturants and museums including religious sites. Worse than Disney. I am not just hitting the main cities like Paris and Rome but small towns that are remote and accessible by trains and boats. I am also renting cars to go through country sides to see vineyards and mid-evil towns and can tell you they are packed. Europe will be coming out of the soft patch and does not need Greece and possibly why they are being tough on this little fly that contributes nothing to the worlds economy.
If you look at game rankings, ZNGA is a dissapointment. With all the financial advantages and staff size, you can't blame investors for their dissapointment. 2nd qtr will be mediocre. They may meet their numbers but few expect over achievement. This is looking more like a 2016 play if they do the right things. As I said in one of my previous posts, the competition is not waiting around to let ZNGA eat their lunch and dinner, maybe breakfast.
Pincus will be asked by fund managers to be more aggressive and make earnings positive. How he gets it done is Pincus business. My only concern is once management announced a work force reduction, they admitted they were over staff. Something we all knew for months under DM. My experience with these cuts is that old guard management tends to be protective of their nest. We do not know if Don had similar ideas and was being blocked by the bigger boss saving it for himself so he can make a splash coming back. What we don't know is if this cut is deep enough or was this a token for activists who wanted to see action. A year to make these cuts is unacceptable. Once they are announced, a three month window is the norm. I have participated in the execution of 5000 plus work force reductions announced and completed within that time frame. You give severance and outplacement services to those who have been displaced and life goes on for the balance of employees after you have meetings with them to tell them the new expectations and clarify the vision. If more responsibility is acquired you bump them up in pay and life goes on. If less responsibility, you reduce the pay and reclassify. A 2000 work force operation would be breeze in cutting 500 plus in one swoop.
Did you not see big sells going across as funds were reducing risks? When you have major market sell offs, sellers don't care about technicals or future potential. They sell and lighten up their position. Also margin call requires some to liquidate their worse performers. ZNGA has been a dissapointment as as soon as it reached 3.12. There was no follow through by management to keep the momentum going. Lack of marketing is largely responsible. Of course all of you Nay Sayers that have been riding the dooms day train choir have an advantage when the stock pulls back because of global events and take the position " I told you so". What you seem to ignore that poor performing stocks that get caught in global sell offs are the first to take a hit. However, a 20 million plus trade in one day was not too bad considering what it could have been. ZNGA remains a news driven stock and will recover again once management gets a little heat from funds that are over weight this stock.
Keep dreaming, these guys will spend it on bonuses before they improve shareholder value. It's still not obvious how they will get lost value back. Many are waiting for EA and or DOT to provide that needed break through but I don't see it yet. It's going to take more creativity than what I've seen.