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Zynga woes deepen as it loses money and players

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(Globalpost/GlobalPost)

Social games pioneer Zynga reported Thursday that it lost money and players in the last quarter, sending it already struggling shares tumbling.

Zynga said that it lost $15.8 million on revenue that shrank 38 percent from a year earlier to $230.7 million.

Meanwhile, the number of people playing Zynga games daily plunged 45 percent from last year to 39 million, according to the company.

The number of monthly active users was down 39 percent to 187 million in a year-over-year comparison.

Zynga shares plunged about 14 percent to $3 in after-hours trading that followed release of the quarterly earnings figures.

San Francisco-based Zynga last month announced that it is cutting nearly a fifth of its staff, or 520 jobs, as it refocuses on games for mobile devices.

Zynga founder Mark Pincus said the cuts were need for the company to "move forward."

Zynga has been pulling the plug on unpopular games and investing in titles for play on smartphones or tablets, as well as its own online arena at zynga.com.

Zynga rose to stardom by tailoring games for play by friends on Facebook. But the two firms have grown apart in the past year as Facebook develops new revenue streams and Zynga seeks new consumers.

The San Francisco-based company has made moves into real-money gaming with the potential to generate windfalls from popular titles such as Zynga Poker.

"Zynga believes its biggest opportunity is to focus on free to play social games," the company said in the earnings release.

"While the Company continues to evaluate its real-money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States."

Pincus early this month recruited Microsoft entertainment division chief Don Mattrick to take over as top dog at Zynga.

"The next few years will be a time of phenomenal growth in our space and Zynga has incredible assets to take advantage of the market opportunity," Mattrick said in the earnings release.

"We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters."

Zynga hit the stock market with a billion-dollar listing in December of 2011 by offering 100 million shares -- one seventh of the company's total -- at $10 a pop.

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http://www.globalpost.com/dispatch/news/afp/130725/zynga-woes-deepen-it-loses-money-and-players