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back to article Facebook game outfit Zynga files for $1bn IPO

Zynga – the online gaming outfit behind the wildly popular Farmville – has filed for an IPO, seeking to raise as much as $1bn. According to the company's SEC filing, Zynga is actually a profitable company. In 2010, it reached $90.6 million in net income and $597 million in net revenue. In the first three months of 2011, the …

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Bronze badge

Well Well, Then...

"Zynga's games run atop Facebook, and the company acknowledged in its filing that this is a risk. "If we are unable to maintain a good relationship with Facebook, our business will suffer," the filing reads."

Looks like you'll have to spread some of the love over to Google+? Will that be so much of a minus?

What would the minus be? Bribery?

Not in the UK anymore...

http://www.theregister.co.uk/2011/07/01/new_anti_corruption_offences_come_into_force_today/

"Foreign companies which operate in the UK could also face prosecution regardless of where the alleged bribery has taken place, unless the suspect activities are permitted locally."

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google+

isn't even an issue yet, because they haven't launched their gaming platform....

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Silver badge
Pint

"Creating 38,000 virtual items every second"

Holy damn. If only people were naturally enclined to work on loop quantum gravity instead, we would have Theory of Everything in no time.

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This post has been deleted by its author

Anonymous Coward

How?

It's not like it's the world's greatest brain trust that's watering their virtual carrots.

Which reminds me, I'll have to go water my actual ones... Bye there!

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Silver badge
Linux

while

I'm picking my virtual carrots and trying to figure out how much more gunk has been poured into farmthingy, SETI@home is using up the other 99.99% of processor time left on my PC after farmthingy has had its share.

PS is it me or do all zynga games seems to look and play rather like farmville ?

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"the other 99.99% of processor time left on my PC?"

With Zynga games as badly written as they are, you're lucky if you have any processor time left at all.

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Anonymous Coward

Thats an interesting idea

Create a Farmville-a-like that works on slightly different rules- basically manual protein folding or something that's harder to automate, but not presented like that. No-where on the website should it say anything of the sort or you'll scare them off. Just "here's a free game, isn't it awesome?" and let them get on with it.

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Silver badge

The wonders of mathematics

2 billion minutes a day boils down to 23 148 minutes per second.

Minutes per second ? Can we make a new yardstick out of that ?

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Gold badge
FAIL

Bye dot.bomb, hello cloud.bomb

I must admit I'm astonished at such IPOs. Who puts such a value on this sort of rubbish?

Zygna is also casually omitting another massive threat to its model: privacy laws.

Zygna grabs data the moment you use it (you can see that in their T&Cs). I noticed they have apparently stopped grabbing "Friends" profiles from users (at least I could no longer find it when I scanned their T&Cs and privacy statement), but they do use and sell such data, so any move to bring back privacy to pre-Bush-Blair-axis-of-privacy-evil levels will hurt them immediately.

I guess the old game is back in town. Hype a business based on air to get a massive IPO, and then sell as fast as you possibly can before reality overtakes unwarranted euphoria. Lessons of the past don't seem to count...

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Anonymous Coward

Sell it

Shurely... if you've just gone public you have just sold it? Or do you mean they bail on the IPO and then try to resell privately? Why would they do that?

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It's not quite a cloud.bomb

People will buy virtual cabbages - by the truckload apparently.

As long as there still enough gullible people out there, Zynga will make profit. This is unlike a lot of IPOs recently where the whole company seems to be built on hype ('we've got 100 million users of our free product.. if we could get them all to pay $10 a month we'd be rich!' (later) 'Hey, were'd everyone go?').

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Silver badge
Stop

simple division

if they really made 11 million profit, then it will take 90 years to get yer 1 billion IPO back.

There will have to be astronomic future growth to make this sensible. How often does that happen?

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Your simple division is wrong, try 11 years.

11.8 million is their q1 net income - up compared to $6.4 million in q1 of 2010. It's a bit lower than you'd expect given their $90 million net income number for last year, but every company has seasonal variations in business, and they probably spent a fair bit preparing for this IPO. I wouldn't worry about their q1 results.

But if you simply take the last yearly revenue number, and divide that into $1 billion, you get 11, not 90. Overvalued? Possibly - even probably - given their dependence on Facebook and the capricious nature of internet users over the course of years. However, it isn't as bad as you are making it - you're flat reading the numbers wrong.

-d

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risky .. however

.. if they can use the IPO money to reduce the server-cluster cost and increase other efficiencies, the company could be worth a whole lot more than $1 billion quickly

.. somewhat mindless casual gaming is obviously huge, and Zynga may be reaching critical mass with 60 million users, meaning advertising costs to maintain growth might reduce ..

.. they may well pull in $1 billion gross this year based on the first quarter .. now suppose they can become more efficient and pull a 20% profit long term . that's $200 million not counting continued growth... using any reasonable multiplier shows the company may be worth several $billion ..

casual gaming where the average user spends $5 per month or less, but can play unlimited time seems a pretty solid business plan, sad, but better than the profits in *serious^ gaming development these days

it would take something more clever and competitive than FarmVille to pull me in, so the only problem I see is someone other than Zynga coming up with more compelling and addictive gameplay

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OK

I'll admit it, whats an IPO?

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Headmaster

Initial Public Offering

When a company sells stock to the general public for the first time.

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WTF?

$90.6 million in net income and $597 million in net revenue

I'm confused. Isn't income the same as revenue? Maybe "net income" and "net revenue" are 'net' of different things?

OK, I really don't care, anyway, because next year the bastards will be using different terminology to try and keep us in the dark.

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Paris Hilton

Title

Revenue is usually the total amount of sales the company did. Income is their revenue minus the cost it took to do the sales. In this case Zynga had $597 million in fake fruit sales, and after the expenses of doing those sales, had $90.6 million left over as income.

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Silver badge

whot?

they had to spend half a billion dollars growing virtual vegetables?

Methinks someone is taking real milk from the virtual cow in advance of the IPO. Either that or each gratuitous greengage needs a server of its own.

Weird.

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Alert

Could make sense, maybe

They do have 60 million users which I'm sure takes up a ****load of servers, electricty, salary for their 1000 employees, and Facebook takes 30% of the profit as well since they have to use FB Credits. That being said, the company's valuation is insane. Electronic Arts was valued at $4 billion last I saw. There's no way Zynga should be more than that.

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IPO? I dunno...

I recall reading something awhile back that Zynga and FB were having differences of opinion, on a number of things. Should the relationship between the two, it's my opinion that one of two things will happen: Zynga will either be forced to get into bed with the likes of Google or they will simply be repurchased by FB. Of the people I know who use FB regularly, almost ALL of them use a Zynga product offering.

I can't see FB willingly part with a potential cash cow like that; conversely, the battle royale that would erupt if Google attempted to "migrate" that userbase over to their platforms. I for one would love to watch the carnage from that one as I believe everybody in that world has an over inflated sense of self-worth and importance, but that's secondary.

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Silver badge
Flame

everybody in that world has an over inflated sense of self-worth and importance

Go on, generalise a bit, why don't you!

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Costs

Their costs are half a BILLION a year. That's a lot of coke & hookers.

If I had any money to invest, and I was insane enough to spend it on anything connected to Facebook, I'd want to know how the revenue and costs are coupled.

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Thumb Down

1 Billion ?

1 Billion dollars to buy Zynga does seem a lot of money, but may be they are worth that much? Since the arrival of Face book the whole web experience seems so much better. I look back to 5 years ago and all the pages from Internet explorer just seemed so boring, whereas now it is like the whole Internet is alive, and vibrant.

Speaking as a Web programmer I really respect Zynga all of their games seem brilliant. Farmville and Café World are just in a different league. I only wish I could produce web pages that were as good. What better way is there to spend a weekend than getting a load of credits, and really trying to get somewhere in Farmville, money well spent to my mind.

Whereas Microsoft were the top internet company of the last decade, just may be Zynga and Facebook will be the ones to watch in the next few years?

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Well, someone had to ask

You work in marketing for Zynga, right?

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WTF?

"Whereas Microsoft were the top internet company of the last decade,"

huh? When did that happen ??

Need to up my meds again - this insomnia and amnesia will be the end of me.

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@Cosmo

No I program Microsoft FrontPage 2002 for another company than Zynga. I am just amazed at what they can do with these games.

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Happy

I thought you said you were a web specialist?

Not meaning to be funny, but I've never heard of a 'web specialist' who used FrontPage. If you're looking for something cheap, pretty easy and powerful, Microsoft's Visual Web Developer Express is both free and a billion times better than FrontPage.

After that there's the likes of Dreamweaver etc. if you want to get a bit more 'professional'.

And the reason everything looks so much better is nothing to do with Facebook or Zygna (Especially not Facebook with their static, blue-and-white colourscheme). It's Javascript, CSS and Flash that make it look good. HTML5 will improve on that even further in the future.

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WTF?

38,000 virtual items every second?!

Look... can't we get these people to play poker instead? Then I wouldn't have to work for a living.

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Zynga Poker

When the US finally legalises online poker Zynga Poker will become the most valueble poker site in the world.

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