Arab Today, arab today worker stock compensation sucks profit out of zynga
Last Updated : GMT 03:23:53
Arab Today, arab today
Arab Today, arab today

Worker stock compensation sucks profit out of Zynga

Arab Today, arab today

Arab Today, arab today Worker stock compensation sucks profit out of Zynga

San Francisco - AFP

Facebook game star Zynga saw its stock market price sink after its first earnings report as a public company showed employee stock compensation turned profit into loss by the end of 2011. The San Francisco firm\'s revenue last year nearly doubled to $1.14 billion but the profit on the books at the end of the third quarter was wiped out by a $435 million loss posted in the final three months of the year. Zynga ended the year with a net loss of $404.3 million, which included more than half-billion dollars in stock compensation workers earned instead of cash at the startup. Its stock price dropped more than six percent to $13.35 a share in after-hours trading that followed release of the earnings figures. Zynga jumped into the stock market with a billion-dollar listing in December. Offering 100 million shares -- one-seventh of the company\'s total -- at $10 a pop, the maker of Facebook games FarmVille, Zynga Poker and Words With Friends was valued at a whopping $7 billion. Zynga\'s billion-dollar entrance was the largest Internet IPO offering since Google went public in 2004, surpassing online bargain service Groupon, which raised $700 million when it went public last year. Despite concerns by some analysts that new Internet stars are being precariously overvalued, Zynga\'s stock was snapped up quickly. Zynga games are free to play but the company makes money by selling virtual in-game goods to players and serving up advertising. The games developer boasts around 240 million players per month in 175 countries, dwarfing its social gaming competitors. \"We are seeing social games and more broadly play become one of the most popular pastimes on web and mobile,\" said Zynga founder Mark Pincus. \"Zynga set new records in the year in terms of audience size, revenues and bookings,\" he continued. \"We saw great momentum in mobile and advertising and ended the year with a strong pipeline of new games.\" Founded in 2007, the San Francisco-based software company makes notoriously addictive games which run on top of social networking site Facebook. In a recent filing for an initial public offering of stock later this year, Facebook noted that Zynga accounts for 12 percent of the revenue at the world\'s leading online social network. Zynga investors appeared unhappy with a prediction by executives that revenue would be \"weighted to the end\" of this year in a sign that the company\'s newer games would take some commitment from players before bringing in cash. Zynga also expected to spending more on developing games and its own online neighborhood for people to play in. Zynga is building a game-themed social network in a move that promises to reduce its dependence on Facebook. Chief operating officer John Schappert, a former executive at videogame titan Electronic Arts, promised that Zynga\'s online community would be \"the most connected social gaming site in the world.\" \"We continue to make good progress and will bring it out when it is ready; which, hopefully, will be soon,\" Schappert said in an earnings conference call. Zynga has seen tremendous growth in the number of people playing its games on smartphones or tablet computers, and is getting better at turning \"players into payers\" after hooking them on free games, according to executives. Schappert saw \"interesting opportunity\" in the potential to make money with its globally popular Zynga Poker if rules are loosened regarding online gambling.  

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