by Staff Writers
San Francisco (AFP) Oct 24, 2012
Shares in social gaming pioneer Zynga jumped more than 14 percent on Wednesday with a quarterly earnings report that revealed a loss and a plan to buy back stock.
Zynga reported that it lost $52.725 million on revenue of $316.637 in the quarter ended September 30 and that it planned to repurchase $200 million worth of its shares.
The San Francisco-based firm's shares rose to $2.43 on the news in after-market trading.
Revenue for the first nine months of this year was up 17 percent to $970 million compared to the same period in 2011, according to Zynga.
Meanwhile, the number of people playing Zynga games each month climbed to 311 million in a 37 percent increase from the same quarter a year earlier, Zynga reported.
"While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming," said company chief executive and co-founder Mark Pincus.
"It's more clear than ever that along with search, shop and share, play is a fundamental pillar of the Internet."
Pincus stressed that Zynga was implementing "a number of steps to drive long-term growth and profitability."
On Tuesday, Zynga began trimming workers, shuttering studios and shelving older titles to get in financial shape for the long term.
Zynga will be "parting ways" with five percent of its full-time workers and dump 13 games, along with significantly cutting its investment in "The Ville" franchise, according to Pincus.
The company will close its studio in Boston and trim its team in the Texas city of Austin. Zynga is also proposing to close its studios in Japan and Britain.
"We don't take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us," Pincus said in an internal memo, a copy of which was provided by Zynga to AFP.
"This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors."
The cost-cutting moves are intended to let Zynga focus on more promising games and ramp up its network on the Web and on mobile devices.
Zynga shares plunged early this month after the company behind social games such as "FarmVille" cut its earnings forecast for the year.
The company cited curbed play of its games along with delays in releasing new titles as among the causes for reducing its revenue expectations.
Zynga rose to stardom by tailoring games for play by friends on Facebook and went on to create its own online playground at zynga.com.
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