Zynga's financial troubles worsen
Weeks ahead of its official Q3 earnings report, the social media games company Zynga has released a "preliminary financial results" report, rarely a positive sign on Wall Street.
The company said late Thursday it will earn around $300 million this year in Q3 2012, down from $332 million last quarter. Most notably, the company took a write-down of $85 million to $95 million on the value of OMGPOP, makers of Draw Something—more than half of what the company paid for it earlier this year. That means Zynga drastically overpaid for the smaller gaming company.
Needless to say, analysts are not happy with where things are going for the San Francisco company. "They suck at forecasting," said Michael Pachter, an analyst at Wedbush Securities. "Nine weeks ago they thought they’d got [their estimates] down to as low as they could be and now they’re down another 20 percent, which means that their monetization is deteriorating faster than we thought."
