Social online game provider, Zynga Inc. (NASDAQ: ZNGA) trimmed losses in the fiscal fourth quarter as the beleaguered company resorted to massive cost cutting measures such as shutting down of offices, slashing workforces and taking off poorly performing titles.
Adjusted earnings were better-than-expected while revenue also edged past Street’s estimate.
Shares leaped about 6.50% in aftermarket trading.
After facing a very tumultuous 2012, a year when Zynga’s stocks plummeted 75% to $2.36 down from IPO price of $10– the company’s CEO, Mark Pincus on Tuesday said that fiscal 2013 will be a “pivotal transition year” for the company as it looks to regain traction by broadening its revenue stream through mobile games, introducing new titles and cutting costs.
On October 2012, the San Francisco based company announced that it will cut nearly 5% of about its 3200 workforce while it also decided to shutter 13 non-performing titles.
For the quarter, Zynga reported net loss of $48.6 million or 6 cents compared with a loss of $435 million or $1.22 a share, in the same period of last quarter.
After excluding onetime items, adjusted earnings or non-GAAP earnings came at 1 cents a share, compared with 5 cents a share.
Revenue during the period plunged 15% to $261 million from $307 million, in the same quarter of last year.
Analysts’ consensus estimate was for loss of 3 cents a share on revenue of $212 million, according to a data compiled by Thomson Reuters.
For the fiscal first quarter of 2013, Zynga is now expecting loss of 2 cents to 4 cents a share on revenue of $255 million to $265 million while analysts were expecting a loss of penny a share on revenue of $240 million.
While Zynga’s quarterly results and outlook on the first quarter was cheered by investors in the evening, earlier during the day, investors’ faith on the company was also reinstated when Bank of America Merrill Lynch’s analyst Justin Post unexpectedly lifted his price target for Zynga shares to $3.40 from $2.70 and boosted rating to “buy” from “underperform”, citing company’s mobile business and asset value behind this sanguinity.
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