
Zynga stock plummets below value of its cash and real estate - sbierwagen
http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-zynga-stock-plummets-20121005,0,5240403.story?twitter
======
danilocampos
So heartbreaking. The front-line folks at Zynga were worked to the bone, by so
many insider accounts. Now all the stock they were counting on has had most of
its value evaporate.

But that's life, right? Counting on equity is, simply, a gamble.

Except when you've rigged the table, as Pincus and his cronies have.

[http://www.forbes.com/sites/nathanvardi/2012/10/05/zynga-
kee...](http://www.forbes.com/sites/nathanvardi/2012/10/05/zynga-keeps-
crashing-but-mark-pincus-is-having-a-great-year/)

They got to play by different rules than the folks whose hard work got them to
IPO. Instead of being subject to lockup, like the rest of Zynga, they got to
cash out early, before the true state of their company was fully appreciated
by the market.

So what's the lesson?

Don't trust people willing to fuck people over to make a buck. You're not
special. If there's a buck in it, you'll get fucked too.

[http://techcrunch.com/2009/11/06/zynga-scamville-mark-
pinkus...](http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-
faceboo/)

~~~
reitzensteinm
Is it really _heartbreaking_ that some Silicon Valley developers, one of the
highest paid professions in one of the highest paid areas of the world, only
made a decent salary instead of a fantastic total compensation package?

It's unfortunate, sure. And quite a few parts of the Zynga story are downright
distasteful, especially the options clawback last year.

But let's not get hyperbolic - they played the startup lottery hoping to get
rich, and lost.

~~~
danilocampos
I think that's easy for you to say. But I bet it really, really hurts for the
many folks who genuinely worked their asses off to see Zynga succeed. You put
in that kind of effort only to watch your boss get rich while you get screwed?

You take Pincus and company, tie their fates to that of the employees, and
everyone loses together? Fine, whatever. Like you said, they played the
lottery. But the mismatch of fates is, to me, what makes this story pretty
damn sad.

~~~
reitzensteinm
A few years ago, I saw a documentary that broke my heart.

A woman in China had an unnecessary, experimental operation done at a
hospital, without her consent. It caused kidney failure, and she needed a
transplant.

There was a match with a family member, but the hospital refused to pay for
it, even though it could have been sued into bankruptcy in the US. For the
want of $7,000 USD, she was dying.

Watching her sit with her young children on her lap, deathly sick with her
husband by her side, the expression of finality and despair on their faces -
I'm not ashamed to admit that it made me tear up.

Now that, to me, is _god damn heartbreaking_. I don't disagree with the
direction of your sentiment, just the magnitude of the word you are using.
It's close to the strongest feelings you can have on a subject. Did you really
feel a pang in your heart when you read the article?

Because to me, those two stories aren't even on the same planet.

~~~
tylermenezes
Your comment is one of those which I so very much hate about HN, because you
already _know_ it's wrong, you're just writing it because you like to argue
and insult others.

By this stupid logic, you can never be happy, because there's always someone
with more reasons to be happy, while the victims of a serial killer probably
had it better off than a child who dies of starvation in Africa.

(Of course, you're a smart person, so I'm sure you're aware of how stupid this
line of arguing is.)

You seem to be pretty strongly in support of someone who by all means cheated
his employees. If that's the case, I certainly hope future employees have the
foresight to do some research on who you are before agreeing to work for you.

~~~
reitzensteinm
That's reductio ad absurdum. Yes, taken to an extreme, it stops making sense,
but all I'm arguing for is a little perspective on how lucky we are as gifted
developers. I might be wrong, but I'm certainly not arguing just for the sake
of it.

Your assertion that I support cheating employees just because I didn't
_explicitly say otherwise_ is quite insulting, and it's what makes me feel the
need to reply to you. I think the deal they got it shitty, and I certainly
wouldn't start taking money off the table before my employees could.

I think you're reading an attitude into my comments that just isn't there. I
suggest we continue this conversation by email, to avoid polluting HN with
what will no doubt be a long thread - mine is in my profile if you'd like to.

~~~
scythe
I think you're ignoring the role of psychology. I think you do this very
explicitly in your first comment:

> _some Silicon Valley developers, one of the highest paid professions in one
> of the highest paid areas of the world, only made a decent salary instead of
> a fantastic total compensation package?_

The relevance of the integrity of the managers to the ways people make
decisions that determine the course of their lives is not something to be
taken lightly. This applies even if the consequences themselves do not appear
to be so dire. There is a distinctly painful feeling that comes along with
devoting your life to someone who abuses that. For those familiar with this
perception, the idea that you could ignore it is preposterous. From your
perspective, whatever it may be, it could beyond your imagination and
experience.

You might say this:

> _Is it really 'heartbreaking' when someone's 17-year-old cat dies? It's a
> normal and expected outcome; plus, not only were they lucky enough to afford
> a pet and keep it in good health, the animal itself hasn't lost much,
> considering it's limited cognitive capacity._

And yet anyone who has been through or even near this situation would find the
argument to be incredibly callous, because the formation of human emotion has
so much more to it than simply evaluating one's present situation.

I understand the sentiment that perhaps nobody is entitled to a fantastically
large amount of money and that people living what we call the good life are a
small minority in the world. However, that just isn't the story here.

Connections between humans are what make society possible. It's reasonable to
care when they are abused.

~~~
reitzensteinm
The comment you quote was trying to point out that they will recover from
this, and have a fantastic career ahead of them.

It was not meant to be a comment on how it feels _today_ , or to suggest that
we shouldn't feel empathy for them because of their future position.

I just meant that in a few years they'll look back on this and laugh, which
makes it story _much_ less sad. Do you disagree with that?

Look, I'm coming from the perspective of an outsider. OP seemed to suggest it
is heartbreaking to read about Zynga, which is what I was responding to. If
one of my close friends was working there, I would absolutely feel a different
way.

Similarly, if I read about a kid's cat dying on the internet, it might just
make me feel a bit down. When my dog died, heartbroken was exactly how I felt.

~~~
CodeMage
Yes, I'm sure everyone will eventually recover from being worked to the bone
and having faith in someone who essentially cheated them.

Well, okay, maybe some of them might have been under a lot of stress and that
might affect their personal life and even health or life expectancy.

Maybe some of the talented people who might have a fantastic career ahead of
them won't recover and become jaded or leave the industry altogether.

Maybe none of that is heartbreaking, strictly said. It's "highly unfortunate"
or "really sad", perhaps.

What really grates is your decision to nitpick about the choice of words
because you saw something that was even sadder on TV.

------
tzs
I'm curious. It's been a long time since I visited San Francisco, so maybe
things have massively changed, but I recall that it used to have things like
coffee shops, restaurants, fast food places, bookstores, groceries, movie
theaters, and all the other kinds of things you'll find in pretty much any
city in the US.

These places employed baristas, waiters, bus boys, burger flippers, sales
clerks, stock boys, and such. Such people typically work fixed shifts, and so
unlike many developers have time to find people to start families with and
have children.

Based on some of the comments here, it would seem that getting by on just a
developer's salary in San Francisco is near impossible--you have to have stock
money to keep you afloat.

So how come waiters, sales clerks, etc., can work in San Francisco and make
ends meet for not only themselves for for a family, but single developers
making more than the combined income of that entire working class family
cannot? One comment mentioned that the developers might have student loans to
pay off, but that's countered by the working class family might have to pay a
lot to add their kids to their health insurance.

Same question for New York, and any other place where people consider
$100k/year too low to be a living wage for a programmer.

~~~
doomlaser
A lot of lower wage people commute from a distance to work those jobs. There
have been articles about this phenomenon for years:

[http://peninsulapress.com/2012/08/28/low-wage-jobs-drive-
sil...](http://peninsulapress.com/2012/08/28/low-wage-jobs-drive-silicon-
valley-employment-growth-forcing-more-workers-into-long-commutes/)

~~~
netcan
You are probably technically correct, but missing the point of the parent
comment. The point is that this thread seems to see developers as the little
guy getting screwed by circumstances & The Powerful while from a different
(more "average") perspective these are relatively well off people that earned
very well complaining that they didn't do outrageously well.

It's good to keep in mind that the world doesn't owe you much. Where you are
would be a massive victory for many. Where you started is where many work
their whole lives to get closer to. Perspective plays trick on us. We think
where we are is normal, slightly above us is where we ought to be.

~~~
theorique
_We think where we are is normal, slightly above us is where we ought to be._

' _massively_ ' above us is where we ought to be, is the way lots of SV
denizens think.

------
xenen
I really really hope that results like this will serve as a wake-up call to
the community that is the valley. We've gone from creating microchips, putting
a PC on every desk, opening up and connecting the web to the whole world with
pioneers and visionaries, to nowadays creating low-quality browser games which
are used to scam users out of private information/money led by ex-wall-street
banker deploying sweatshop-like environments, and stealing stock back from
employees while scamming public investors at the same time.

Allowing things like this to happen, accepting that this kind of behavior is
okay and enabling these kinds of characters to thrive is exactly why the
valley has become so frothy. The transformation of Silicon Valley into
Hollywood, where anyone with a big enough mouth and large enough ego can
thrive is nearly complete. But I'll sure fight tooth and nail until the day I
get squeezed out of this place - voting with my dollars and my labor, and a
small but convinced voice in what is right and what is wrong.

------
goodcanadian
OK, I have done a bit of math:

Book value (all assets - all liabilities): $2.46 per share

Book value less expected write off of $90M: $2.34

Book value less all intangibles: $2.01

Current Assets (essentially cash) less all liabilities: 0.78

Current market value: $2.35

So, the market is valuing it at exactly next quarter's expected book value.
This means that they still believe there is some value in the intangibles (I
don't) or the business (I don't).

For giggles, here are the some numbers for Research in Motion.

BV: $18.15 per share

BV less intangibles: 11.81

Current assets less all liabilities: 6.22

Market value: 7.76

~~~
steve8918
You don't perceive value the business? They still generate $300M in revenues
per quarter. That sounds more like an emotional valuation rather than an
objective valuation.

~~~
goodcanadian
Yes, and they spend nearly $400M per quarter to generate that revenue. Using
more precise numbers, their net loss over the last 4 quarters was about $0.73
per share. By my rule of thumb of awarding a P/E of 10, that makes the
business worth -$7.30 per share.

Now in reality, that is a very simplistic analysis, and in point of fact, I do
perceive some value in the business, just not very much. It is something that
is very hard to quantify (as are other intangibles like copyrights and
trademarks). In the end, I do have to go with my gut a little bit (as you say
"an emotional valuation"). I don't personally have much use for Zynga's games
or their business model, so I am aware that I might undervalue them somewhat,
but what the the numbers tell me is that they are a poor business to invest in
even at this "low" price. Other non-financial comments on this story and
elsewhere reinforce my opinion that when it comes to doing business, Zynga has
a lot to learn.

~~~
firebones
The most damning thing in all of this is that while the obvious salvation for
Zynga is to be a roadkill acquisition by Facebook (where immediately much of
their overhead is removed through reduced transaction costs), the market is
placing a negative expected value on it.

Aside from no faith in management, what else could be the reason for the
discount? Their business model is so bad that reducing the transaction costs
can't fix it? They have hidden liabilities related to their copycat culture
that haven't surfaced yet? Shareholder litigation? Or just simply a massive
burn rate?

~~~
tatsuke95
> _"Aside from no faith in management, what else could be the reason for the
> discount?"_

At _this_ point Zynga could be liquidated and still produce value. But the
lower-than-book valuation implies the fear that Zynga will eat into its assets
(re: cash) before that has a chance of happening, thus lowering its value.

So, basically, no faith in management...

~~~
shawabawa3
From the parent level comment: The book value doesn't take into account an
expected write off of $90m, which would drop the price per share to lower than
the share price

------
zynga_employee
I read HN all the time, but I have never commented before. I am a (relatively
new) Zynga employee and I wanted to add my thoughts.

Personally, I am stil very happy to be working at Zynga. I enjoy my work and
my team, and I am compensated very well. Also, all of the benefits from
working at Zynga (the food, the atmosphere, the very good health benefits,
etc.) are still available. The only negative I see is that this job might not
last for more than a year, and my stock isn't worth very much.

As for everyone hating all of the Zynga employees: everyone I have met and
whom I have worked with in my two months at Zynga has been very smart and very
nice and incredibly fun to work with. I don't understand why people on Reddit
and HN love to demonize the employees of Zynga. I would feel very sad if my
friends or I were to be laid off.

~~~
lotharbot
> _" I don't understand why people on Reddit and HN love to demonize the
> employees of Zynga."_

I apologize if I give offense while attempting to shed some light on why
people have a problem with your company (and those who choose to work there).
It's difficult to be honest about this question without coming across as mean,
but I will try.

1) wholesale copying other companies' games (see
[http://www.scribd.com/doc/101954002/EA-v-Zynga-Complaint-
Fin...](http://www.scribd.com/doc/101954002/EA-v-Zynga-Complaint-Final) for a
legal complaint and <http://news.ycombinator.com/item?id=4335287> for
discussion.) From that thread: _"they must realize that every day they go to
work and rip off someone's original work."_ It's hard to respect someone who
knowingly makes their living this way.

2) The game mechanics of Zynga games often hinge on what might be viewed as
"bad" use of psychology -- manipulative, addictive, and in a sense abusive of
the friends functionality of facebook. It's hard to respect someone who
knowingly treats people so callously.

3) Common opinion is that the games themselves range from mildly awful to
completely terrible, and are successful almost entirely due to the "bad"
psychology above. It's easy to respect someone like notch, who got rich making
an awesome game. It's hard to respect people like Pincus, who got rich by
making games that are fundamentally lame.

Again, no offense meant to you or your friends. Maybe you're on a team that
doesn't do any of the above bad stuff. But the parts of Zynga most of us are
familiar with do all of that bad stuff. I hope this helps clarify why you
might see so much hate directed that way.

~~~
irreverentbits
Honestly, this is ridiculous.

1\. The vast majority of the games industry borrows heavily from titles which
have come before, so Zynga isn't unique in this regard, nor should it be
singled out.

2\. The establishment of addiction-creating feedback loops is practically a
games industry science. Again, this is hardly unique to Zynga.

3\. Subjective statements about quality aside, I think it's safe to say that
Minecraft has highly addictive qualities, and therefore Notch can't really be
put on a pedestal here in the context of your second assertion.

~~~
chucknelson
Your points stick for a subset of games, but I don't think bringing Minecraft
into the mix makes sense.

Other "addicting" games that Zynga can be compared to are things that have
been in the casual space for years, or a decade-plus. Things like Bejeweled
and the casual flash-game portals that (used to be) everywhere.

Zynga is in the business of shallow gaming experiences that focus on
extracting money from users. I think when most people think of _good_ game
companies, they are thinking of companies that make games with depth that
don't require a refill (via money) to keep having "fun" or progressing.

~~~
marvin
Are you sure you're not confusing PopCap and Zynga? PopCap make Bejewled, and
create games that are much deeper than the Zynga games I've tried.

------
state
Could someone who didn't see this coming please explain to me how there was
another outcome for this company?

I'm being completely serious. When I read headlines like this I just assume
this happened at least nine months ago. I'd like to hear some reasoned defense
of how this company was going to survive.

~~~
pbreit
Well, it makes a _ton_ of money ($1.3b ttm revs). Is, by far, the leading web-
based/social gaming company. Is an excellent acquisition target. Has, by far,
the most DAUs/MAUs. Is in an easy-to-monetize industry. Would be in the best
position to take advantage of relaxed gambling laws. And on and on. What don't
you get?

------
beatpanda
Awesome. Let them collapse, and may a hundred new and better companies bloom
in the exodus.

~~~
groby_b
Yep. And maybe a few hundred devs will struggle to pay their mortgage.

Yes, Zynga has many issues. But before we get all cold-hearted and rejoice at
the wonderful invisible hand that will correct all, can we for a moment
remember that it's going to affect mostly the people in the trenches? Who
often had little to no say in the outcome?

~~~
hkmurakami
The idea of getting into a mortgage based on non-vested or non-lockup-expired
stock options reminds me of Japanese professionals getting into mortgages
based on their salary + overtime pay (overtime was effectively eliminated
during and after the financial crisis, which left these people unable to meet
their monthly mortgage payments).

~~~
rationalbeats
Your comment is so isolated from the real world, and the very fundamentals of
humanity, that I have to wonder how old you are and if you even have a
girlfriend. Let alone kids.

The comment you wrote is something I would have written 17 years ago on a
Prodigy bulletin board forum after I just finished reading some selected
essays of Ayn Rand.

~~~
dschuler
Wait so you think it's reasonable to bank on some uncertain future benefit to
pan out, and expect people to be 'heartbroken' when it doesn't go through?
Come on, you don't mean that, do you?

When I worked for a startup, I only considered my salary in my financial
decisions. This also meant that I could switch jobs and be reasonably certain
that my standard of living wouldn't change. We were offered equity as well,
and the agreement we had to sign had several provisions that I could only
describe as being pro-founder/anti-employee. For example:

1\. Upon termination of employment (for any reason), the company can buy back
your shares at book price, whether you like it or not. In other words: You'll
never see a big payout from your work if you go.

2\. There should be no expectation of a market for the shares in the company,
and there may never be one. Again, good luck selling those shares.

3\. The founder has the right to sell his shares, but employees have no tag-
along right. So even if the company is sold, you will probably not be able to
cash in at that point, since your labor/skill are part of the sale.

4\. The employees' shares are subject to dilution. How much dilution? Who
knows, maybe 1%, maybe 99%, whatever's good in the view of the founders.

This stuff is pretty standard, too. What I don't get though is how people will
make multi-decade (i.e. mortgage, kids) financial decisions on a benefit
that's this uncertain. Instead of actual equity, they could just say "we'll
give you more money later if we get rich and feel like it". At least it would
be more honest.

~~~
marvin
I can't believe people are actually willing to sign those kinds of agreements.
If you can't sell you shares and the company can basically buy them back at
will, the ownership is just theoretical. It's like getting monopoly money with
the added clause that you may exchange it for real money if the owners get
rich and want let you perform the exchange.

Please tell me that at least some companies have reasonable agreements with
their employees/shareholders. Otherwise it's like someone else said a few
months ago, Silicon Valley is just overrun with sleazy leadership types who do
their best to screw over their employees.

~~~
dschuler
I couldn't believe it either, and left that place pretty quickly. I still talk
to a lot of people that work there, and I get the feeling that they live in
this bubble where they assume everything will work out for the best. To them,
I'm just cynical.

I hope that this isn't the rule in most places, but I wouldn't know :/

------
mullingitover
Aren't they something like 15% of FB's revenue, and FB is more like 85% of
theirs? Seems like FB would just keep on screwing with their visibility on the
site to drag their numbers down to the muck, then buy Zynga with change they
find between their couch cushions.

------
sbierwagen
see also: [http://www.valuewalk.com/2012/10/zynga-inc-znga-poker-
chief-...](http://www.valuewalk.com/2012/10/zynga-inc-znga-poker-chief-tired-
of-gambling-and-exits-the-company/)

    
    
        Troubles seem to be following the struggling game maker, Zynga Inc 
        (NASDAQ:ZNGA), this time now with the exit of Laurence “Lo” Toney, an executive 
        who oversaw the company’s hugely popular online poker game.
    
        Tony’s exit was revealed via his LinkedIn profile, where he changed his current 
        profession to “mentor at MuckerLab,” a Los Angeles startup accelerator, and 
        lists Zynga Inc (NASDAQ:ZNGA) among his previous professions.
    
        [...]
    
        Tony now joins the list of top-level executives who left Zynga Inc 
        (NASDAQ:ZNGA) in the past couple of months. In September, Chief technology 
        officer Allan Leinwand and chief marketing and revenue officer Jeff Karp 
        resigned, while in August, chief operating officer John Schappert and chief 
        creative officer Mike Verdu left the company. Not only this, but the game maker 
        also witnessed the exit of two vice presidents, Bill Mooney and Brian 
        Birtwistle, at the end of August.

------
sbashyal
Stock price plummeting below asset value indicates that investors believe that
Zynga is now in the business of burning money instead of making money.

------
DanBlake
Article does not mention debt- Does Zynga have any? If so, it explains some of
this.

~~~
001sky
This is a good question.

There is somethin like $600MM of ST liabilities, though vs $1.2B of cash &
equivalents (/securities).

Not sure what that is, but that is (potentially) a big deal.

Although it seems to be on the BS QoQ

[http://www.google.com/finance?q=NASDAQ:ZNGA&fstype=ii](http://www.google.com/finance?q=NASDAQ:ZNGA&fstype=ii)

LT Debt = $100MM, so not as significant an issue.

~~~
rjtavares
Those $600MM are detailed in their Quarterly report:

-$450MM are deferred revenues (i.e., people bought things in their games but they don't recognize everything as revenue right away, a common procedure with online video games).

-$40MM are customer deposits, which according to them "represent amounts received for unredeemed game cards as well as advanced payments from various customers."

-$120MM are things like transaction taxes, compensation related liabilities and accounts payable.

So, it's not really debt, just working capital.

~~~
001sky
\- Interesting note.

To the tune of $450, though, these constant amount in deferred revs is
reasonably large source of working capital/liquidity @ ~5x their bank line.
But valuation of the type implied in the headline should (most likely) be done
on some concept of net cash, I would think. It cost you money to liquidate the
assets before you get your hands on the cash.

Gross margin less SGA is only 30% of revenues, so maybe only $300mm-ish needs
to be shaved off the cash balance from deferred revs. These liabilities must
be incurred to realize the future revenues wigthout refunding back the pre-
pays, good 1st approximation.

So, $1.0 to 1.1B is closer to the floor value. They are at $1.9B market cap a5
$2.50, so almost 2.0x coverage of this right now. (options, etc might swing
this a bit).

------
dfc
Why is there no discussion of obligations? A company could have a lot of cash
and real estate, but debt obligations could wipe out a ton of that value. I
realize the discussion is about Zynga's deteriorating future but it seems that
in order to draw any conclusioons from the stock price being lower than
cash+real-estate a discussion of obligations is required.

------
s_baby
Can someone explain to me why a company would be priced below its
"fundamentals"?

~~~
joelrunyon
My thoughts exactly.

It's a good headline, buut won't the market correct this naturally to account
for the fact it's worth "less" than it's assets or is Zynga going to just keep
dropping?

~~~
lutusp
> It's a good headline, buut won't the market correct this naturally to
> account for the fact it's worth "less" than it's assets or is Zynga going to
> just keep dropping?

Not unless equities investors decide to act rationally, and there's little
evidence for that. Stocks falling below the true value of company assets is
such a common occurrence that cagier, usually bigger, players will locate and
"greenmail" such a company into buying their own stock with company assets to
correct the difference between market valuation and basic value.

<http://en.wikipedia.org/wiki/Greenmail>

So I guess the answer to your question is "yes" but exactly how this happens
is sometimes rather complicated.

Obviously if a company can be located whose physical plant and inventory value
is higher than its stock valuation, such a company is vulnerable to a takeover
by anyone able to detect this peculiar state of affairs and act on it.

------
kitcar
... according to one analyst. Paraphrased from the article: J.P. Morgan
analyst Doug Anmuth wrote (Zynga's) assets are worth $2.46 per share... In
afternoon trading Friday, Zynga stock was at $2.35.

~~~
khuey
Totally reasonable thing to trade at if investors believe the company is
destroying value instead of creating it.

------
philwelch
So when do the corporate raiders come to perform a hostile takeover and
liquidate Zynga for the cash and real estate?

~~~
jstanderfer
Zynga is structured such that Mark Pincus has a majority of the voting shares
(50.15% to be exact). This means he cannot be fired nor can any takeover occur
without his consent.

~~~
mratzloff
And he's already cashed out a significant portion of his stock, so he has no
personal motivation to ever sell.

------
timpeterson
fitting fate for the CEO, Mark Pincus, whose been quoted as saying he "doesn't
want to fucking innovate. You're not smarter than your competitor. Just copy
what they do and do it until you get their numbers."

quora discussion on this: <http://b.qr.ae/hFgaYd>

~~~
erichocean
Peter Thiel discussed the underlying worldview for why people think and act
like Pincus at his startup class, which Blake Masters wrote up here:

[http://blakemasters.tumblr.com/post/23435743973/peter-
thiels...](http://blakemasters.tumblr.com/post/23435743973/peter-thiels-
cs183-startup-class-13-notes-essay)

Worth a read. I think Pincus' overall approach is actually dominant right now
in tech, not an outlier. Most people just aren't so crude about discussing it.

~~~
trhtrsh
Where is the mention of Pincus or Zynga? I couldn't find it.

------
AlexMuir
Should FB buy them? Much of Zynga's trouble has been that their interests and
Facebook's didn't align.

My first thought was "Why bother? FB can just wait and pick up the good staff
in the wind down." But the exact opposite of that logic has led to acquihires.

~~~
esusatyo
I don't think Facebook is much interested in gaming. If anything they'd buy
another social network company.

~~~
MartinCron
I think that Facebook _gets_ that the current batch of skinner-box games have
a limited lifespan as users (and Facebook itself) build up their immunities to
them.

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aaronmarks
Does this mean they're undervalued and it's a good time to buy Zynga?

~~~
supersaiyan
there expected to have a low quarter coming up, the price will most likely
drop then, but they're mau has been fairly consistent so it might not be too
bad

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andreyon
they said the same with Nokia about valuation. They were saying only it's
patents are worth 7 B ... but at some point all NOK was valued at 6.1 B . It
has recovered since, but the idea is that you can burn your cash real quickly
if you're not earning new income

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VSerge
It is baffling that analysts can essentially divide their guidance by 2
overnight. With such "guidance", it's easy for small investors to get fleeced.
And with everyone in the industry gloating about how we saw it coming, it's
only going to make us all look a little less trustworthy. It's a shame too,
because many called out Zynga's business model as unsustainable, even though
that didn't get much coverage in the financial or mainstream press.

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shimsham
"We're addressing these near-term challenges by targeted cost reductions and
focusing our new game pipeline to reflect our strategic priorities."

Methinks someone has been raiding that bingo variant for phrases.

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crugej
I have been waiting to see this company die and I hope the end is near. They
may try and save it with virtual currency gambling as their next con on the
human brain but it is inevitable.

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outside1234
who could have seen this coming? :)

~~~
sbashyal
I believe that those who cared about company values did see this coming. See
this one comment in Hacker News about a year ago:
<http://news.ycombinator.com/item?id=3225688>

~~~
outside1234
yeah, sorry, behind the sarcasm that was my point.

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benguild
Didn't they try to ease stock away from those who owned it pre-IPO? How has
that panned out now? … Was it converted to less valuable cash at the time, or
is the cash more valuable now? (or was it that they got nothing in exchange
for losing the stock)

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seivan
Developers and Designers getting screwed over by the business monkeys and
other scum... as usual. Further fuelling my hate for non-creative garbage.

~~~
dasil003
It's unfortunate that you cherry-pick Zynga as representatives of "non-
creatives".

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kellybrooke
Are they renting any co-working space? Heard the offices are nice.

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bad_user
It's some kind of poetic justice that Zynga before the IPO was compared to
game makers that have historically produced kickass games, like Blizzard.

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lsteam
this is really sad

------
SwearWord
Bazynga

------
benguild
Damn

~~~
halis
Sometimes this is a good opportunity to invest BUT in this case I would steer
clear. I think their business model is questionable which brings into question
their profitability. If they continue losing money, they could burn through
their book value in no time.

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bookworm_
Who cares about unsophisticated investors who buy at the IPO or employees, or
long-term stability? This company was a short term deal like many others in
the web startup space. Hype worked. Virtual goods? It makes me laugh everytine
I say it. Pincus and other investors made heaps of cash from this, no doubt.
Mission accomplished. Call it sa success. Time to close up shop and on to the
next one.

Facebook is much the same way. Some people have made fortunes. Who cares about
public investors, Wall Street and employees? They'll survive.

It's just business.

~~~
tatsuke95
You realize that capitalism can't function when people keep stealing capital,
right?

------
bigohms
I have held Zynga throughout the year. The extent of leadership fail here is
unprecedented. n number of remediation tactics should have taken hold early to
prevent where we are now. Here is a copy of my e-mail to Pincus (still gone
unanswered):

"Mark -

Can we have a man-to-man? Seriously, please explain to me, a small shareholder
in Zynga, exactly what the fuck you have been doing with my investment?
Clearly, the answer is not building value in any meaningful way. Any third
year entrepreneur will have trouble seeing your performance this year
amounting to anything other than a collected check, a leveraged office, a
leased plane ($3K a wet flight hour?!? What is that a fucking citation X?!?)
and an overpaid security team. If the plan is to ride this thing to the nines,
let me know so that I can pull out and forget any thoughts of a really well
integrated ecosystem of gaming.

BTW: If you see the OMGPOP/Draw Something team, tell them to get the fuck off
of their asses (if they're still around) and do something about long-tail
gamification model if they want to do something about user retention.

That's all, k thx bye _drops mic_."

~~~
moot
This reads like most of the e-mail I get, and I don't even run a publicly
traded company!

~~~
AgentConundrum
I don't even want to know what most of your email looks like, although I can't
say I'm not at least a little curious.

~~~
rhizome
most popular tumblr of all time.

