Should Zynga (ZNGA) Oust CEO Pincus?
Tweet
Share
E-mail
Get Alerts ZNGA Hot Sheet
Join SI Premium – FREE
Following an announcement of an 18 percent workforce reduction announced earlier this week, Zynga (Nasdaq: ZNGA) CEO Mark Pincus held a company meeting on Tuesday to address employee concerns. One of the big issues brought up at the meeting was the fact that the game market had changed and Zynga became too bloated, reported the WSJ.
Pincus said Zynga wanted to get back to a more-nimble form factor, able to navigate and innovate.
But, couldn't Zynga do the same with the same 18 percent of people? What Pincus didn't address was that it failed to capitalize on its $200 million OMGPOP acquisition. "Draw Something," arguably one of the more popular mobile games of 2012, was great, but then what?
Investors should take a look at Groupon (Nasdaq: GRPN). The company, founded by Andrew Mason, found that growth had become stagnant. It needed to think outside the box and could only do so through new leadership. Though company founders generally have enough vision to launch a company into something special, sometimes it takes a new business leader to overcome that plateau.
Since replacing Mason at the end of February, shares of Groupon are up over 12 percent. It will take a little longer to see if Groupon's move will ultimately pay off for investors, but right now the company is attracting some positive sentiment. Not looking to the same period last year, when Zynga shares were trading for over $6 per share, the company is now trading at the same price level as last February. This isn't the first misstep that Zynga has made and it may not be the last. (Here and here, for example.)
Investors should hope that Zynga's Board takes action or that the company gets a favorable takeover bid from a larger rival, namely Electronic Arts (Nasdaq: EA), Take-Two (Nasdaq: TTWO), or Activision (Nasdaq: ATVI).
Heck, even Microsoft (Nasdaq: MSFT) might be able to 'make something' out of Zynga at this point.
If it goes it alone, the best chance that Zynga has is to integrate with a large casino operator as online gaming becomes more widespread. With the U.S. economy improving, however, lawmakers might take a cooler approach on online gambling as the extra state/district revenue might not be needed as much.
The seas of mobile gaming are rough, crowded, and full of sharks. Let's hope Zynga sees the same light and opts to bring the most value to shareholders.
(Note: the author doesn't have a position in Zynga and doesn't plan to take one.)
(Another note: BlackBerry (Nasdaq: BBRY) is also faring well since Mike Lazaridis and Jim Balsillie left the company. New management, new vision.)
Shares of Zynga are down 3.3 percent Thursday.
Pincus said Zynga wanted to get back to a more-nimble form factor, able to navigate and innovate.
But, couldn't Zynga do the same with the same 18 percent of people? What Pincus didn't address was that it failed to capitalize on its $200 million OMGPOP acquisition. "Draw Something," arguably one of the more popular mobile games of 2012, was great, but then what?
Investors should take a look at Groupon (Nasdaq: GRPN). The company, founded by Andrew Mason, found that growth had become stagnant. It needed to think outside the box and could only do so through new leadership. Though company founders generally have enough vision to launch a company into something special, sometimes it takes a new business leader to overcome that plateau.
Since replacing Mason at the end of February, shares of Groupon are up over 12 percent. It will take a little longer to see if Groupon's move will ultimately pay off for investors, but right now the company is attracting some positive sentiment. Not looking to the same period last year, when Zynga shares were trading for over $6 per share, the company is now trading at the same price level as last February. This isn't the first misstep that Zynga has made and it may not be the last. (Here and here, for example.)
Investors should hope that Zynga's Board takes action or that the company gets a favorable takeover bid from a larger rival, namely Electronic Arts (Nasdaq: EA), Take-Two (Nasdaq: TTWO), or Activision (Nasdaq: ATVI).
Heck, even Microsoft (Nasdaq: MSFT) might be able to 'make something' out of Zynga at this point.
If it goes it alone, the best chance that Zynga has is to integrate with a large casino operator as online gaming becomes more widespread. With the U.S. economy improving, however, lawmakers might take a cooler approach on online gambling as the extra state/district revenue might not be needed as much.
The seas of mobile gaming are rough, crowded, and full of sharks. Let's hope Zynga sees the same light and opts to bring the most value to shareholders.
(Note: the author doesn't have a position in Zynga and doesn't plan to take one.)
(Another note: BlackBerry (Nasdaq: BBRY) is also faring well since Mike Lazaridis and Jim Balsillie left the company. New management, new vision.)
Shares of Zynga are down 3.3 percent Thursday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Fisker (FSR) files form 10-K, sees more job cuts, reiterates going concern doubts
- Spotify (SPOT) jumps 10% as Q1 revenue, gross margins beat Street's estimates
- Tesla (TSLA) to Accelerate Launch of More Affordable Models
Create E-mail Alert Related Categories
Insiders' Blog, Management Changes, Trader TalkRelated Entities
LayoffsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
