Zynga stock drops after gambling plans fizzle
| NEW YORK
Zynga聽investors cashed in their shares Friday after the company said it was dropping its plans to pursue online casino-style games in the U.S.
THE SPARK: The San Francisco company said late Thursday that it was no longer seeking the U.S. gambling license it would need to move into casino-style games, which are played for real money. The company still plans to test a gambling product in the United Kingdom.
Zynga聽posted second-quarter earnings late Thursday and reported that it had trimmed its losses. The company has been cutting staff to reduce costs.
THE BIG PICTURE: Adding online gambling could have given聽Zynga聽a potentially large source of revenue that the company badly needs.
When聽Zynga聽went public late 2011, its games, such as "Farmville" and "Mafia Wars," were the most popular on Facebook. Things have changed since then. King.com, the maker of "Candy Crush Saga," has unseated聽Zynga as the top social games maker.
The second-quarter results were聽Zynga's聽last under the direction of founder and CEO Mark Pincus. The company brought aboard former Microsoft executive Don Mattrick as CEO , who ran the Xbox video game business.
THE ANALYSIS: Mattrick is well-regarded in tech circles and there is some optimism in his ability to turn聽Zynga's fortunes around.
Wedbush analyst Michael Pachter sees changes within Mattrick's first 180 days at the company. "We believe Mr. Mattrick will act swiftly to focus on a handful of new initiatives and to right-size聽Zynga's聽staffing levels," Pachter wrote.
Zynga聽did not immediately respond to an emailed request for comment.
SHARE ACTION:聽Zynga聽Inc., fell 60 cents, or 17 percent, to $2.90 in morning trading Friday, then stabilized in early afternoon trading. The stock is down 63 percent since its initial public offering in December 2011.
