Feeds

Zynga lowers valuation to a bargain $10bn

Virtual bumpkin game maker braces for rocky market

The Power of One Infographic

Social network gaming firm Zynga may seek a lower price than expected for shares in its initial public offering, valuing the company at $10bn.

In its latest Securities and Exchange Commission (SEC) filing, the company said a third-party analysis in the third quarter had decided the company was worth $14.05bn, up from the second quarter analysis that priced the Facebook games developer at $13.98bn.

Zynga is planning to file its intentions with the SEC on Friday for an initial float of 10 per cent of the firm, which will bag around $900m based on a range of $8 to $10 per share, sources close to the process told Reuters.

The IPO for the gaming firm, famous for virtual bumpkin diversion Farmville, will then be priced on 15 December.

Zynga's market debut follows Groupon's just a few weeks ago and precedes the highly-anticipated launch of Facebook, which is rumoured to be on the slate for next year.

The market has been fairly fickle with internet company stock of late, dropping new entrant Groupon to well below its initial pricing and even easing on well-established shares like Amazon's.

The $900m Zynga is hoping to get from going public is a little shy of the $1bn it was aiming for in July this year, which is no doubt a nod to the volatile conditions at the moment. These are partly spurred by the gloomy global economic climate and partly by the unproven quality of the business models for the new crop of social media and internet firms.

For Zynga, the concerns are around its dependence on Facebook, which is the main platform for its games. However, the firm is profitable, making its money from the virtual items players buy within its free games.

In the three months to the end of September, the company made a net income of $12.5m, a healthy haul, but less than half of what it made in the third quarter of 2010 as it delves into its coffers to develop new games. ®

Boost IT visibility and business value

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.