To whon it may concern:
I have been a Zynga investor since 2012. I'm very concerned with what's going on with the company right now. It has been a year since Don Mattrick was hired as a CEO, but he has not done anything worthy of the pay check he is getting. He reduced Zynga's workforce, but it does not take a genius to recognize that it was needed. The company is giving Don Mattrick an exorbitantly high pay without him having to prove he can turn around Zynga (http://bit.ly/1mgHZtF).
The stock price of Zynga now is a reflection of what the market thinks Don can do. He is seen as a non-factor. The stock is trading below the price right before Don was hired. That never happens when the market has high regards for the new CEO. Look what the new CEO's has done at Groupon or Blackberry. I'm not saying that Zynga stock should soar now because of Don. It should however stabilize, but it has not. It dropped from 5.89 USD to 2.78 USD in a matter of months. If you plot the revenue vs market cap of gaming and internet companies, you would clearly see that Zynga is priced as if it has no growth potential. It pretty much sums up what the market thinks of company. I would like to think the market is wrong and that I am right in still holding on to my shares, but I'm beginning to doubt the leadership and the people of Zynga.
How come no new games has been released yet? What are the 2000+ employees doing? If they are just improving and maintaining old games, then why does the company spends quarter after quarter 56% to 85% of it gross profits on "Research and Development". The only new game released is Farmville 2 : Country Escape, which at best is only moderately successful. Until now, nothing significant came out of the very expensive "Research and Development". Is it possible to request for a breakdown of the "Research and Development"? I would really like to know where that money is going. Zynga's DAU/MAU is still dropping consistently, so Don also failed in this area. You may say that it stabilized last quarter, but I think if you separate the numbers from Natural Motion the dropping trend is still there. You can also reason that ARPU slightly improved under Don's leadership, the change is actually statistically insignificant. Zynga's ARPU has been quite robust even in Pincus' era.
I played several Zynga games so I could confirm if the negative reviews are indeed true. I was appalled to learn that most of the negative reviews are not far-fetched. Some games are very buggy that you would end up losing "gems" (or whatever the currency is called in the game). If I were paying player, I would really be mad. There was one time where a bug was reported, it was well described and was reproducible, but it took four months for it to get fixed. What makes this worse is that Zynga has a terrible customer support. If you follow the Zynga thread on Stocktwits.com (http://stocktwits.com/symbol/
znga), you will see a lot of irate investors. Maybe this company does not really care about small investors. I hope you would be able disclose if you are working on new games and when will it be released. I hope you don't disregard this letter. Thank you for you time.
Thank you for your email. We appreciate the feedback. Unfortunately we are in quiet period leading up to our Q2 earnings report, where communications with investors are restricted. We currently do not provide a breakdown of R&D spend. However in the past, we have said that a significant portion of R&D is allocated towards new games. Feel free to reach out post our Q2 earnings report at which point we will have a better opportunity to update you on the business.
Thank you for your interest in Zynga.
Zynga Investor Relations