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Lukewarm welcome for Zynga

Zynga got a lukewarm welcome on its first trading day on Friday. The share fell 5% to USD 9.50 at the close. The developer of games such as “CityVille,” “FarmVille” and “Mafia Wars” sold 100 million shares for USD 10 each, the top end of a proposed range. In an interview with Bloomberg, Zynga’s CEO  Pincus said he wasn’t concerned about the stock-price decline. His aim, he said, is achieving long-term value for investors.   “We’re not experts on stock trading and we don’t intend to be,” he said. “This story is going to play out over the next couple of years, not the next couple of trading days.”

Pincus did not comment on specific plans for the capital raised in the IPO, citing the U.S. Securities and Exchange Commission’s “quiet period” rules around companies going public. He pointed to Zynga’s history of spending hundreds of millions of dollars on data centers.  He also cited acquisitions, including last year’s USD 53.3 million purchase of Newtoy Inc., maker of the popular game “Words With Friends.” Zynga made 20 acquisitions in 2010 and the first nine months of 2011.

“We’re bigger believers in the future of play and social gaming than any other company, and we wanted to be in a position that we had the resources to invest more in that future than any other company,” Pincus said. Today, Zynga gets more than 90% of its revenue from Facebook Inc. Investor concerns about Zynga’s dependence on the social-networking company may ease over time as it adds users on mobile devices and other platforms, Chief Operating Officer John Schappert said in an interview yesterday.

“We’re very happy to be on Facebook because it is where all our players are playing,” said Schappert, who left Electronic Arts Inc. (ERTS) for Zynga earlier this year. “At the same time, we’re also excited about new platforms. We’ve made big investments in mobile, we’ve grown our mobile user base both on iOS and Android, and we’re also on some of the new emerging platforms like Google+.”

Nordic Investor


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