Zynga Inc (ZNGA)

[august1991]

Zynga (NASDAQ:ZNGA) will release its Q2 2013 earnings on July 25, and we expect the company to post a decline in revenues and monthly active users. It is quite likely that the weakness in several gaming titles that was apparent in the first quarter might have carried on into Q2 as well. In addition, the company closed several underperforming games that will further impact results.

In early June, Zynga had announced that it would cut around 18% of its workforce, or approximately 520 people, for an estimated $70-$80 million in pre-tax savings for the company. The move will lower Zyngas headcount below what it had at the time of its IPO. This suggests that the kind of explosive growth that the company was expecting when it went public doesnt exist anymore. It will be interesting to see how this move impacts its Q2 profits. Zynga is going through a rough patch, and its financial performance is likely to fluctuate as it reorganizes its core business and invests in new growth avenues.