ynga's shares plummeted 19% in after-hours trading after the troubled social gaming company cut its financial projections for the year and announced it would write down nearly $100 million from its recent acquisition of OMGPOP, the maker of "Draw Something."
In March, San Francisco-based Zynga paid $180 million for OMGPOP based primarily on the value of "Draw Something," which was at the time hugely popular on mobile devices and the top-selling game on Apple's iTunes Store.
However, it soon became clear that Zynga bought OMGPOP at the peak of the game's popularity, because its usage rapidly declined in the following months. Zynga said Thursday that it would take an impairment charge of between $85 million and $95 million on OMGPOP in the quarter ended Sept. 30, essentially admitting that the social and mobile games maker is worth half of its original purchase price just six months later.
In addition, Zynga said that its bookings — the value of products it sells in a given period of time, which is different than the revenue it recognizes — would be between $1.085 billion and $1.1 billion for the full year, down from a previous estimate of $1.15 billion to $1.225 billion.
Adjusted earnings after certain costs are deducted will be between $147 million and $162 million, down from previous expectations of $180 million to $250 million.