Forget That Fake Money
Both Facebook and Zynga filed documents with the SEC today detailing the terms of a new, more lax partnership. The two-year-old contract between the once interdependent companies–just check out their IPO filings–was slated to expire.
Under the loosened agreement, Zynga is free of a number of obligations, including implementing Facebook credits on Zynga game pages and using Facebook as its exclusive social platform. Naturally Zynga is interested in establishing its own network, with the ability to own its own players and establish its own ad relationships. Zynga also no longer has to display Facebook ad units, for example.
But Facebook also got one (big!) thing: the ability to develop its own games. That might explain why Zynga stock is trading almost 13 percent down after hours.
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After two big blows in succession–downgraded earnings forecasts, followed by 5 percent layoffs and the end of its studios in Boston, Japan, and the UK–Zynga’s third quarter earnings report exceeded the Street’s “rock bottom expectations.” That might explain why after hours trading is currently up 13.6 percent.
Zynga had predicted a net loss of $90 to $105 million for the third quarter, but only reported a net loss of $52.7 million. The company attributed part of that loss on a $95.5 million impairment charge on its acquisition of OMGPOP, the New York City-based makers of Draw Something. Zynga also said that a 28 percent sequential decrease in monthly unique payers (MUPs) from the second quarter (4.1 million) to the third quarter (3 million) as “largely driven by Draw Something.”