

Zynga Raised $1 Billion Credit Line In July   - ekm2
http://online.wsj.com/article/SB10001424053111904006104576502513515829194.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29

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danteembermage
For public companies committed lines of credit are very common, probably more
so than public bonds if you look at the universe of publicly traded firms. Why
they get them is not entirely clear, liquidity insurance is the obvious answer
but there could be others e.g. reputation building or establishing banking
relationships. Having a billion dollars of credit and using it responsibly can
be a good signal. These things are really cheap too, good rates and very small
commitment fees (1/4% per $ per year or so).

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richcollins
Can anyone explain why they might need "additional cushion"? I thought Zynga
was wildly profitable.

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richcollins
Found the answer. They aren't very profitable:

[http://www.businessinsider.com/chart-of-the-day-zynga-
revenu...](http://www.businessinsider.com/chart-of-the-day-zynga-revenue-net-
income-2011-7)

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gsmaverick
Read the details. It has to do with the way GAAP applies to virtual goods.
GAAP makes you book the revenue over the "estimated average life" of the good
whereas Zynga's non-GAAP measurements book the revenue all up front when the
good is sold.

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georgieporgie
This and Groupon make me think "Web 1.0" was when we knew how to get users,
"Web 2.0" is/was when we know how to get revenue, and "Web 3.0" will be when
we figure out how to turn a profit.

