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A comment on Zynga stock plummets below value of its cash and real estate. Parent comment

Re:Zynga stock plummets below value of its cash and real estate by steve8918 on Thursday October 11, 2012 @09:43AM (#4640714)
I guess you didn't go through their financials. You do realize they can cut expenses like R&D, SGA, etc, and probably not affect their revenues immediately. To me, they are like YHOO, where they have a bunch of people using the products through sheer inertia. YHOO in the past few years has been doing exactly that, which is cut costs relative to their revenues, and shown a decent profit, without affecting their income drastically.

ZNGA could do the same thing. They could cut R&D by 1/3, SG&A by 2/3, and even cut down on things like customer support, etc, and their current earnings for at least a few quarters wouldn't be affected immediately. They still need to create new games to entice those same users

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Re:Zynga stock plummets below value of its cash and real estate by pbhjpbhj on Thursday October 11, 2012 @03:47PM (#4642425)
I didn't because I thought you had some inside knowledge on the situation and that you might share it. They were questions of the non-rhetorical type.

>They could cut R&D by 1/3, SG&A by 2/3, and even cut down on things like customer support, etc //

Sounds great. When you say SGA, isn't that mainly wages. So, lay off most of their staff, do away with a large part of development and still generate the same earnings. Won't that just cause them to fail slowly?

I can see how Yahoo can coast on inertia to some extent but aren't Zynga more reliant on novelty? Yes new people come along, but they're entering - in social gaming terms - a pool of people who've already tired of a particular game/games.

What do you make of reports like this http://arstechnica.com/business/2012/08/as-zynga-stock-price... suggesting that several of the top developers are gone/going. Surely that would make it harder to cut R&D and make great new games.

Will be interesting to see how things progress for sure.

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