Weekly Tech Review: Zynga and Microsoft
This week was quite eventful for technology companies, especially Zynga (NASDAQ:ZNGA), which announced its first quarterly earnings after its IPO. We also saw some other significant developments related to companies like Microsoft (NASDAQ:MSFT) which could impact their value in the coming years.
Zynga
Zynga announced its first quarterly earnings post-IPO. It generated a total of $1.14 billion in revenue in 2011, up 90% from its revenue in 2010. However its expenses rose even faster, and coupled with the huge stock based compensation expenses related to the issue of restricted stock to employees following the IPO, it posted a net loss of around $404 million.
However, most of its new game releases have done well, with some like CastleVille and Hidden Chronicles attracting a significant number of users in a short span. It recorded more than 240 million monthly active users in Q4 2011, which continues to grow as it launches new games on social and mobile platforms.
Zynga also launched a new game – Slingo – in the casino genre. It has already announced that it plans to make a move in the online gambling space. By launching new casino themed games to complement Poker and Bingo, it may be trying to build a significant user base first before jumping into the space.
Zynga’s stock price had jumped up in the days before the IPO due to positive investor sentiment, reaching an all-time high of $14.5. Following the heavy increase in operational expenses and a recorded net loss, it crashed back to $12.
We currently have a $13 Trefis price estimate for Zynga, which stands nearly 5% above its market price.
Check out our complete analysis of Zynga
Microsoft
Microsoft was in the news all week, for a number of reasons. It reached its 52-week high and also revealed some more details about Windows 8 on ARM and Office 15, the next versions of its two most successful products.
Some more details of the next version of Windows Phone – Windows Phone 7.5.1 Tango – were also leaked this week. Microsoft is targeting Tango at budget handsets in order to gain additional smartphone market share. It will be optimized for low RAM devices and also include some new features especially for entry level smartphones. Microsoft will be targeting the Tango update solely at low-end smartphones, and won’t deliver this update to users of existing high-end Windows Phones.
Microsoft also launched msnNOW, a new social news aggregator which helps users stay up to date with the latest news stories across the web, personalized based on social data from Facebook, Twitter and Bing. It will be available on multiple platforms and offer social integration to deliver personalized breaking news on a variety of topics. msnNOW will be rolled into its Online Services division, which also includes Bing.
We currently have a $32 Trefis price estimate for Microsoft, which stands just above its market price.