January 24, 2020

After Disappointing Reports, Zynga Bets on Draw Something 2

The company continues to lose money, employees and gamers, who no longer want to play its games. Analysts soberly warn that Zynga desperately needs a series of new mobile hits to improve its profitability and restore some of the luster of its earlier years. Earnings reports in recent quarters have been dismal.

This quarter was no exception. The company reported that its revenue was down 18 percent from the year-ago quarter, results that prompted shares to slip in after-hours trading. Zynga’s number of daily active users, or people who logged into its games once a day, dropped 21 percent. However, it did report a small profit.

But the company hopes that a new game, which it is releasing Wednesday evening, will be the beginning of a new chapter — one flush with profits and praise from users — that will help it regain some of the footing in the gaming industry that it helped shape.

The new game is a sequel to Draw Something, the popular, turn-based drawing game that has entertained millions of players who sketched images for their friends in a modified, touch-screen version of Pictionary. Last March, Zynga paid $180 million to buy Draw Something, which was created by a New York start-up, Omgpop. Then it watched as players lost interest in the once popular game and took their time elsewhere.

Although the company says the game still has millions of users worldwide, it is betting that the new version will bring back former fans who had become bored.

The success of Draw Something 2 is more about salvaging the remains of an expensive acquisition. It is a crucial test to see whether Zynga can spin any of its former traction on the Web to mobile — essential if the company wants to remain relevant and continue as a competitive gaming company in the future.

Richard Greenfield, an analyst at BTIG, a global trading firm, said it is normal for players to lose interest, especially when there is no shortage of games across an assortment of consoles, phones, tablets and hand-held devices. None of the top games currently charting in the iTunes App Store are games developed by Zynga, he said, but rather by relatively unknown upstarts.

“Why aren’t those Zynga games?” he said. “Why can’t they make great hits on mobile? They are saying they are a mobile-first company and, yet, they haven’t been able to launch a hit mobile game.”

For the new game, Zynga added new drawing tools and accessories as well as features that make Draw Something 2 more closely resemble a social network, with buttons to allow them to share their creation on Facebook, Twitter and Instagram. In addition, users can find and follow other people who are playing the game, browse their shared drawings and “like” and comment on them.

Zynga has also enlisted celebrities on this version of the game, including the pop performers Will.i.am and Carly Rae Jepsen, so that their fans can see their drawings through the application as well.

“We want to reactivate people who played and loved Draw Something 1 but lapsed,” Travis Boatman, a senior vice president of mobile at Zynga, said in an interview at the company’s New York headquarters.

Zynga is going all out for the release of the new game, with a partnership with Universal Pictures around the coming animated film “Despicable Me 2” to show related advertisements in the game as well as base drawing challenges around the movie.

Caitlin Turosky, a marketing manager at Zynga, said advertising deals like that one had great potential. Zynga currently makes money by showing ads in the free versions of its games, by selling premium versions of its games and by allowing players to make in-app purchases. But eventually, Ms. Turosky said, the company could even show players advertisements based around the topics and objects they are sketching.

Zynga is also experimenting with games using real money, but those efforts are largely located in the United Kingdom.

In the company’s earnings report, it said it earned just a penny a share, or $263.6 million in revenue. During the same quarter of last year, the company reported revenue of $321 million. Even so, the company beat analysts’ expectations, who estimated that the social gaming giant would report revenue of $203 million and a loss of 4 cents a share. But Wall Street was unimpressed; the stock fell slightly in after-hours trading. The company also posted a modest profit of $4.1 million, compared with a loss of $85 million in the year-ago quarter.

“They’ve been going through a rough couple of quarters,” said Brian Blau, an analyst with Gartner Research who follows the company.

This article has been revised to reflect the following correction:

Correction: April 25, 2013

An earlier version of this article misspelled the name of a pop performer. Her name is Carly Rae Jepsen, not Carly Rae Jespen.

Article source: http://www.nytimes.com/2013/04/25/technology/after-disappointing-reports-zynga-bets-on-draw-something-2.html?partner=rss&emc=rss

Nintendo Lowers Its Forecast for Wii U Sales

Nintendo has a lot riding on the Wii U, the successor to the Wii, which revolutionized the gaming industry seven years ago with a casual approach that brought video games to new audiences. The company is banking on the Wii U to revive its fortunes after the disappointing introduction in 2011 of its hand-held gaming machine, the 3DS, which prompted the company to reduce its price sharply to stoke demand.

Nintendo executives had also said the Wii U would prove that dedicated game systems still had a future in a world now teeming with less expensive, more convenient mobile games played on smartphones and tablets.

The latest numbers from Nintendo are not promising. The company said that it had sold 3.06 million Wii U games and that it expected sales to reach just four million units through March, almost 30 percent less than a previous projection of 5.5 million.

Nintendo also downgraded its 3DS sales expectations, saying that it would sell 15 million units through March instead of the 17.5 million units it previously forecast, and that it expected to sell fewer games.

“Nintendo needs a change in strategy,” said Michael Pachter, a gaming research analyst for Wedbush Securities, a Los Angeles-based investment firm. He said that Nintendo had botched the Wii U design — a touch screen used together with a television — and that the device was unimpressive for dedicated gamers and baffling for casual ones.

Nintendo executives need to reorganize the company so it will continue to be profitable even with lower hardware sales, Mr. Pachter said. He also said the company should consider developing smartphone games, a move Nintendo has resisted.

“Smartphones and tablets are nibbling away at the edges of the market for games,” he said. “If they can’t beat it, they should consider making money off it. Why can’t Mario be on the smartphone?”

Still, Nintendo returned to profitability for the first nine months of its business year, largely thanks to the weakening of the yen. That lowers the costs of Japanese exporters and bolsters their earnings.

Nintendo’s profit for the April-to-December period came to 14.55 billion yen, or $160 million, compared with a loss of 48.35 billion yen a year earlier, the company said in an earnings announcement that painted a mixed picture of its prospects.

The company raised its profit forecast for the business year through March to 14 billion yen from 6 billion yen. Nintendo does not break out quarterly results.

Article source: http://www.nytimes.com/2013/01/31/technology/nintendo-warns-of-weak-wii-u-sales.html?partner=rss&emc=rss

DealBook: Citigroup’s Profit Down 12%, but Beats Estimates

A Citibank branch in New York.Shannon Stapleton/Reuters A Citibank branch in New York.

2:00 p.m. | Updated

Citigroup on Monday reported that both its revenue and profit fell in the second quarter, underscoring the anemic economic environment financial institutions face both here and abroad.

While the results came in ahead of what analysts had forecast, net income dropped 12 percent while revenues were down 10 percent from the same quarter a year ago.

The bottom line, however, was helped by lower credit losses and tight controls on expenses, which has been a major goal of Citigroup’s chief executive, Vikram Pandit.

Expenses were down 6 percent from the second quarter of 2012 while credit losses fell 31 percent.

“In short, we are on top of the things we can control,” Mr. Pandit said during a call with analysts on Monday. “We are managing our expenses closely and making sure we are right-sized for the environment we anticipate.”

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Citigroup, along with Bank of America, was among the institutions hardest hit by the financial crisis of 2008 and Mr. Pandit has spent the past four years slowly restoring the company to profitability while disposing of weaker assets.

Citi Holdings, the division of the company that includes the problem assets, recorded a loss of $920 million in the quarter. But the division’s assets continue to shrink, falling 28 percent from the same period a year ago.

Citigroup shares remain far below where they were before the financial crisis, but rallied slightly on Monday’s earnings report. Its stock was up 0.75 percent to $26.85 in midday trading.

The bank reported earnings of $2.9 billion, or 95 cents a share, with revenue falling to $18.6 billion. Those earnings include a $219 million gain related to how certain debt of the company is valued, as well as a one-time loss of $424 million on the sale of a stake in Akbank T.A.S., a Turkish bank.

Excluding one-time charges, Citi reported earnings of $1 a share on revenue of $18.8 billion. Analysts had been expecting adjusted earnings of 89 cents a share on revenue of $18.9 billion.

Highlighting how businesses remain more bullish than consumers, lending to mid-to-large companies jumped 22 percent, while borrowing by consumers increased by 2 percent.

Within the more volatile capital markets businesses, results varied sharply by segment. Investment banking fees slumped 21 percent to $854 million, while equity trading revenues fell 29 percent to $550 million.

But thanks to lower expenses and credit losses, income at the securities and banking unit rose 18 percent, to $1.4 billion.

Asked about the Libor scandal now rattling the broader banking industry, Mr. Pandit and John Gerspach, the bank’s chief financial officer, both said Citigroup was cooperating with requests for information from several jurisdictions.

But Mr. Pandit suggested Citigroup might fare better than other institutions facing large penalties in settling Libor-related claims, such as Barclays. Last month, Barclays agreed to pay $450 million to British and American regulators to settle claims that it had manipulated how the widely cited Libor rate is set.

“The only thing I can say is do not infer from the situation of one Libor-submitting bank that every bank is the same,” said Mr. Pandit.

Article source: http://dealbook.nytimes.com/2012/07/16/citigroups-profit-down-12-but-beats-estimates/?partner=rss&emc=rss

On the Road: Airports Say They Too Need to Raise Fees

Last week, I heard from the representatives of the nation’s airports, who would like to be able to raise the limit on the $4.50 maximum charge that they can impose on each passenger who comes their way.

Then on Monday, I expected to hear from the Transportation Department about the airlines’ total annual revenue from the array of fees that they have been adding to the price of tickets. But after months of wrangling with the airlines over exactly how they must report their fee revenue, the department basically punted.

In finally releasing fee data for 2010, in a report delayed for over a month, the department said that domestic airlines raised “almost $5.7 billion in fees” last year. But the report included revenue from only two basic categories of fees, checked bag charges (up 24.6 percent from 2009, to about $3.4 billion) and charges for reservations changes (down 3.1 percent, to about $2.3 billion).

But if you want to compare apples to apples, the report does not quite add up. What about that oft-quoted figure of $7.8 billion in so-called ancillary revenue that the department reported for 2009?

Well, the 2009 figure included a wide range of the fees. And so far, the department and airlines have not been able to agree on how the comparable data for 2010 should be reported. The airlines have been insisting that they should not be required to break down ancillary revenue in minute detail, noting that McDonald’s does not account for how many French fries it sells. Airlines also say that fee revenue is now their only toehold on profitability, given high fuel costs.

We’ll let the government and the airlines sort that out. Industry analysts’ estimates for airline ancillary revenue last year put the comparable total at about $10 billion, by the way.

But what about the airports, which have been complaining that they cannot raise their passenger fees even as the airlines raise or impose surcharges at will on everything except the cabin air.

Some airport managers say the current rules hurt them in two ways. First, they say, the $4.50 maximum passenger facility fee is too low, especially since planes are flying fuller than ever, because their costs on things like security are rising. And, they note, the billions of dollars in airline ancillary fees are not subject to the 7.5 percent federal tax imposed on base fares.

Revenue from that tax goes into the government’s Airport and Airway Trust Fund, which covers most of the Federal Aviation Administration’s budget and also pays for some airport capital projects. If those fees were taxed, there would be more money for additional airport projects, the managers argue.

“Airports should be permitted to charge a user fee at whatever level they can charge that would also work in the market,” said Greg Principato, the president of the Airports Council International North America, which represents the nation’s roughly 450 commercial airports.

Mr. Principato knows that air travel fees are a touchy subject for consumers. But, he said, airlines lobby hard to prevent airports from raising the passenger fee ceiling partly because restricting this revenue limits the ability of airports to expand. That can discourage the entry of new airline competition, or the expansion of existing competition.

“The airlines are deregulated and can charge whatever they want,” he said. “But the airports are still regulated as they were in the old days, and cannot charge a fee beyond the $4.50. The airlines like that because it keeps competition out,” he said.

The airlines say that airports are overreaching on this. “Our customers already pay an exorbitant amount of taxes,” said Jean Medina, a spokeswoman for the Air Transport Association, the airline industry trade group. Any increase in the airport passenger fee, which is collected as part of the ticket price, “would raise the cost of travel, which harms consumers and the entire travel and tourism industry,” she said.

Meanwhile, I’ve heard from a few readers complaining that some of the fees they pay on airlines are not reimbursed by their companies. Last weekend, the Business Travel Coalition, which represents corporate travel managers, asked its members about their reimbursements.

In responses from more than 200 managers, almost all said their corporate policies allowed employees to be reimbursed for checked bag fees. But other airline fees were less likely to be approved. About 85 percent said that they would reimburse employees for itinerary change fees. About 74 percent said in-flight meals could be expensed, and 45 percent told the coalition they reimburse in-flight Wi-Fi charges.

And a mere 14 percent said they would approve an expense for a priority coach seat. But that is a perk, typically an aisle seat toward the front of the plane, that business travelers often opt for.

Myself, I don’t check bags but I do like to buy that aisle seat. Note to accounting: That’s an extra $15. O.K.?

E-mail: jsharkey@nytimes.com

Article source: http://feeds.nytimes.com/click.phdo?i=8e7e0f046cefae8b44556d2ca7fc7b0e

DealBook: G.M. Stock Sale Likely to Be Later Than Expected

Already facing diminished expectations for a stock offering of the American International Group, Treasury Department officials are planning a secondary sale of General Motors shares for late summer or early fall — later than many investors expected.

In November, G.M. raised more than $20 billion selling common and preferred stock, a public offering that reduced the government’s stake in the automaker to a minority position.

At the time, the Treasury Department said it planned to sell off its remaining shares through another sale but provided no specific timetable. Many investors thought the next offering would take place shortly after the lock-up period ends, which is in late May.

Treasury officials plan to wait until at least mid-August or September, according to people with direct knowledge of the matter who were not authorized to talk publicly.

“It’s entirely up to them what they do with their shares,” said James Cain, a spokesman for General Motors. “We continue to be focused on profitability around the world and further strengthening our balance sheet.”

Shares of G.M. have taken a hit in recent months. After surging to nearly $40, the stock has dropped to around $31, below its market debut in November. The company’s initial public offering was priced at $33.

With a later stock offering, G.M. will have an additional quarter of earnings under its belt. Investors will also have a better sense of the impact of the Japanese earthquake disaster on the supply chain. All that could help lift the stock and the value of the government’s stake.

Despite the potential for improved proceeds, the government is unlikely to turn a profit on its $49.5 billion bailout of the troubled automaker, fashioned in late 2008 and early 2009. Treasury officials are currently projecting a $10.8 billion loss from investments in G.M.

“We’re going to lose money in the auto industry,” though less than originally expected, Treasury Secretary Timothy F. Geithner told the Detroit Economic Club last month. But, he added, “We didn’t do these things to maximize return. We did them to save jobs. The biggest impact of these programs was in the millions of jobs saved.”

If the Treasury is able to sell off its remaining stake later this year, it would be a major political victory for the Obama administration. Many analysts had projected that the government would be entangled with G.M. for years.

The people said the timing of the G.M. offering is not linked to the troubles with the stock sale of A.I.G.

At one point, the government had hoped to raise as much as $20 billion with a public offering of the insurer, of which taxpayers own 92 percent. But shares of the insurer have struggled. After hitting nearly $63 in January, A.I.G. stock is now trading around $30.65.

Based on the recent price, the A.I.G. offering would be closer to $9 billion. Treasury officials have said that taxpayers will break even on their investment provided A.I.G. can sell its shares for at least $28.72.

Evelyn M. Rusli and Nick Bunkley contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=6b89a5fbbf28458af8e753f554bd7ccf