TMCnet News

Biz Break: Zynga looks to NFL, Tiger Woods for salvation [San Jose Mercury News :: ]
[August 07, 2014]

Biz Break: Zynga looks to NFL, Tiger Woods for salvation [San Jose Mercury News :: ]


(San Jose Mercury News (CA) Via Acquire Media NewsEdge) Aug. 07--Today: Zynga again disappoints Wall Street with its financial performance, and looks to sports games for a rebound. Also: Earnings reports from Cisco's young rivals, along with Nvidia and SolarCity.



The Lead: Zynga hopes sports games can score better returns Don Mattrick found success at Electronic Arts with games featuring the NFL and golfer Tiger Woods, and he's hoping the same approach will help reinvigorate Zynga.

The San Francisco social-gaming company again disappointed Wall Street with its financial performance Thursday, announcing a net loss of $62.5 million, or 7 cents a share, on sales of $153.2 million, a revenue decline of 33.4 percent from the same quarter a year ago. Zynga also reduced its forecast for the full year, explaining that it delayed games originally scheduled for release in the second half of the year.


"We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business," Mattrick said in Thursday's news release.

His plan for growing Zynga involves licensing deals for known brands, with the biggest deals announced Thursday involving the launch of a sports-themed branch of the business called Zynga Sports 365. Zynga reported that its NFL-themed mobile game, called NFL Showdown, went live in select markets Thursday, though the game did not show up in searches of Apple's App Store nor Google's Play Store on Thursday afternoon in the Bay Area. The game required deals with both the league and the players union to include team and player names, and allows players to manage the teams through the NFL season.

Zynga signed Woods to a deal for a mobile game using the widely recognized golfer's name and likeness, picking up where EA left off when the Redwood City video game publisher and Woods ended their 15-year partnership last fall.

Mattrick spent most of his career at EA, from 1991 to 2005, when the company rode its annual NFL series named for broadcaster and former Oakland Raiders coach John Madden as well as Woods-themed golf games to big financial gains.

"We believe sports represents one of the largest, evergreen categories in entertainment," Mattrick said in Thursday's conference call.

Zynga also signed a deal with Looney Tunes to develop a "runner" game with the company's popular cartoon characters, such as Bugs Bunny, which it hopes to deliver by the holiday season. Runners such as the "Temple Run" series have become popular mobile games, with players controlling a character swiftly moving through worlds.

Zynga zoomed to popularity with early Facebook-based social games such as Farmville, but has been left behind as Facebook opened up its platform to other game publishers and players transitioned to mobile devices. The company debuted its sequel to Farmville in the second quarter, but Zynga's disappointing financial results indicates that the game did not perform well, possibly pushing Zynga to look elsewhere for brands that have already proved popular.

Since being lured from Microsoft to replace founder Mark Pincus at the helm of Zynga last year, Mattrick has jettisoned plans to seek a real-money gambling license, laid off hundreds of employees and acquired British mobile company NaturalMotion in an attempt to stabilize Zynga's listing ship. The moves have yet to have an effect on Wall Street: Zynga went public at $10 a share in 2011 but closed at $2.92 Thursday after a 4.7 percent gain that quickly reversed after the results were released to push shares closer to $2.70.

SV150 market report: Cisco's young rivals continue to grow Wall Street declined ahead of Thursday's earnings reports, which also included two young networking companies seeking to challenge Cisco and impressive growth from Nvidia.

Ubiquiti Networks and Arista Networks showed continued sales growth in their efforts to steal share from market leader Cisco, and both companies experienced rapid share increases in late trading Thursday. San Jose-based Ubiquiti earned $49.4 million, or 56 cents a share, on sales of $156 million, which represented profit growth of 71 percent and revenue growth of 54 percent year-over-year. Those increases continued a trend for Ubiquiti, which grew profits 50.9 percent and revenues 40.1 percent in 2013, despite the smallest workforce in the SV150. Arista Networks released its firstly earnings report since its initial public offering in June, and continued to show strong revenue growth as well as profits, a rarity for a young company. The Santa Clara firm revealed earnings of $21.6 million, or 34 cents a share, on sales of $137.9 million, and shares shot more than 8 percent higher after closing with a 2 percent gain at $72.22. Ubiquiti's stock rose more than 7 percent in late trading after closing with a 0.1 percent gain at $39.32.

While far from a startup, Nvidia's push into consumer offerings with the Shield handheld gaming device and a new tablet helped the Santa Clara graphics-chip company to profit gains of 33 percent and sales growth of 13 percent. Nvidia reported income of $128 million, or 22 cents a share, on sales of $1.1 billion, and shares topped $18 in late trading after closing with a 1 percent decline at $17.46. SolarCity continued strong gains Thursday into after-hours action following its earnings report, which detailed a loss of $47.7 million, or 52 cents a share, on sales of $61.3 million; shares closed with a 3.8 percent gain at $75.63 and added about 5 percent in late trading. Two of Silicon Valley's leading biotech companies also announced earnings Thursday, with Medivation showing profits of $47.9 million, or 60 cents a share, on sales of $148.1 million and Genomic Health losing $4.6 million, or 15 cents a share, on sales of $70.5 million. Sunnyvale communications company ShoreTel produced record quarterly profits of $4.9 million, or 8 cents a share, on sales of $88.6 million.

In regular trading, Tesla Motors continued its run toward record prices with a 1.4 percent gain to $252.39, just a couple dollars shy of its all-time closing high. Facebook gained 1 percent to $73.17 after announcing the acquisition of security company PrivateCore, but emails from CEO Mark Zuckerberg could hurt his case in a lawsuit with a Palo Alto homebuilder. Google decline 0.5 percent to $563.36 after partnering with Barnes & Noble for local book delivery, but the Mountain View company's video site, YouTube, is reportedly struggling to increase advertising. Apple declined 0.5 percent to $94.48 as Cupertino gave an update on the construction of the company's new headquarters, and Intuit fell 0.2 percent to $80.84 after acquiring British payroll-software company PaySuite. Twitter dropped 1.1 percent to $43 while rejiggering its ad-sales process, and Symantec gained 1 percent to $23.97 after including an update on its CEO search with its earnings report.

Up: Zynga, Netflix, SunPower, SolarCity, Workday, LinkedIn, Tesla, Yelp, Symantec, Facebook Down: EA, SanDisk, Juniper, VMware, Oracle, Twitter, Nvidia, Splunk, NetApp, Gilead The SV150 index of Silicon Valley's largest tech companies: Down 6.78, or 0.44 percent, to 1,527.19 The tech-heavy Nasdaq composite index: Down 20.08, or 0.46 percent, to 4,334.97 The blue chip Dow Jones industrial average: Down 75.07, or 0.46 percent, to 16,368.27 And the widely watched Standard & Poor's 500 index: Down 10.67, or 0.56 percent, to 1,909.57 Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

___ (c)2014 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services

[ Back To TMCnet.com's Homepage ]