August 20, 2019

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

Cyprus Set to Reject Bailout, Citing Tax on Bank Deposits

Lawmakers were scheduled to vote late Tuesday on the €10 billion, or $13 billion, bailout.

Should the measure fail in Parliament, Mr. Anastasiades and his E.U. partners would have to return to the negotiating table. Analysts have also raised the possibility of bank runs and a halt in liquidity to Cypriot banks from the European Central Bank if the measure did not pass.

The bailout plan, negotiated over the weekend, has aroused harsh criticism in many quarters for its unprecedented inclusion of ordinary bank depositors — including those with insured accounts — among those who would have to bear part of the cost.

The original terms of the bailout called for a one-time tax of 6.75 percent on deposits of less than €100,000, and a 9.9 percent tax on holdings of more than €100,000. The moves are designed to raise €5.8 billion of the total €10 billion bailout cost — a condition imposed by Cyprus’s E.U. partners.

Under a new plan put forward by Mr. Anastasiades early Tuesday, depositors with less than €20,000 in the bank would be exempt, but the taxes would remain in place for accounts above that amount.

But Mr. Anastasiades said that the changes probably would not be enough to secure a majority in the 56-member legislature to approve the bailout plan.

“I estimate that the Parliament will turn down the package,” he said on state television as he headed into a series of meetings.

A government spokesman, Christos Stylianides, echoed that opinion, telling state radio, “It looks like it won’t pass.”

The managing director of the International Monetary Fund, Christine Lagarde, said Tuesday she was in favor of modifying the agreement to put a lower burden on ordinary depositors.

“We are extremely supportive of the Cypriot intentions to introduce more progressive rates,” she told an audience in Frankfurt.

She urged leaders in Cyprus to quickly approve the plan agreed to by European leaders in Brussels last weekend.

“Now is the time for the authorities to deliver on what they have commented,” Ms. Lagarde said.

She complained that critics have not recognized how much the agreement will force Cyprus banks to restructure and become healthier.

In Brussels, Simon O’Connor, a spokesman for Olli Rehn, the E.U. commissioner for economic and monetary affairs, said Tuesday that finance ministers from countries using the euro had agreed the previous night in a teleconference that Cyprus could adjust the way the levy would operate.

But Mr. O’Connor said that E.U. authorities still were waiting to see whether the adjustments being discussed in Cyprus deliver “the same financial effect” as the agreement between Cyprus and international lenders in the early hours of Saturday.

“On the parameters of this levy, we will not comment as long as that’s a process that’s still under way,” Mr. O’Connor.

Cypriot banks were closed Monday for a bank holiday that has been extended through Wednesday.

The governor of the Cypriot central bank governor, Panicos Demetriades, warned lawmakers on Tuesday that as much as 10 percent of the €65 billion in deposits placed in Cypriot banks would flee the country as soon as banks’ doors open Thursday morning, should Parliament approve the deposit tax.

He also cautioned that the plan to exempt deposits under €20,000 from the tax posed a new problem, since the government would only be able to raise €5.5 billion, instead of the full €5.8 billion required by lenders. The gap would be considered a breach of the bailout agreement and “perhaps might not be accepted” by Cyprus’s lenders, he said.

It could also mean that Cyprus could eventually seek a higher tax on bigger deposits, a move that raised further alarms in Russia, where President Vladmir Putin has condemned the tax as unfair.

On Tuesday, Russia’s envoy to the European Union, Vladimir Chizhov, said in Brussels that the levy was “similar to forceful expropriation,” and warned that “the whole banking system can collapse,” Reuters reported.

Jack Ewing in Frankfurt and James Kanter in Brussels contributed reporting.

Article source: http://www.nytimes.com/2013/03/20/business/global/cyprus-set-to-reject-tax-on-bank-deposits.html?partner=rss&emc=rss

Off the Charts: In Europe, Even the German Powerhouse Is Losing Steam

In the second and third quarters of this year combined, Germany grew at an annual pace of just 1.6 percent. France, the second-largest economy in the euro zone, showed an annual rate of just 0.6 percent over the same six months.

Until recently, the euro zone seemed to be separated into three groups when it came to economic growth. Germany, and a few other Northern European countries, were doing the best, while economies in the peripheral countries were shrinking. In between were countries with moderate rates of growth.

But now it appears the in-between group is faltering, while the peripheral countries continue to struggle. In the third quarter, according to Eurostat, the European statistical agency, Belgium, which had been among the better performers, showed no growth at all. The same was true for Spain, and the Netherlands reported its real gross domestic product declined for the first time since 2009.

The accompanying charts show the change in gross domestic product figures for nine euro countries since the second quarter of 2009, as well as figures for the three largest industrial countries outside the bloc. Germany’s economy is 7.6 percent larger than it was at the bottom, a growth rate more than twice that of France. There is as yet no third quarter estimate for Italy, but its growth rate was tepid even before its borrowing costs began to rise.

One of the few relative bright spots is Ireland, whose economy appears to be finally growing after years of austerity and deflation. But there is no sign of recovery in Portugal, and the Greek economy continues to decline. Greece is not shown in the chart because it is currently unable to produce seasonally adjusted statistics. But Eurostat estimates that the Greek economy was 5.2 percent smaller in the third quarter than it had been a year earlier.

In the early months of recovery, Germany may have benefited from its neighbors’ weaknesses. Its companies were better positioned to export, both within Europe and outside it, thanks in part to Germany’s having held down the growth in labor costs. The euro was also weaker than an independent German mark would have been, providing more help for German exports.

But now it appears that the weakness of its trading partners may be slowing Germany’s economy, at the same time that borrowing costs are rising for those countries. A survey of German analysts this week showed investor expectations for the economy had fallen to the lowest levels since 2008.

The United States economy has grown 5.6 percent from the bottom, for an overall rate of 2.5 percent a year. That may seem good when compared with other countries, but by historical measures it is the weakest recovery since World War II. The economy grew 6.3 percent — a 2.7 percent annual rate — over the nine quarters following the 2001 economic bottom, in what had been the slowest pace until now.

Floyd Norris writes about finance and the economy at nytimes.com/economix.

Article source: http://feeds.nytimes.com/click.phdo?i=3ff90e6cff18a5c34e009575c4715ef1

Economix: More Americans Are Renouncing Citizenship

The number of Americans who are renouncing their citizenship has been climbing in recent quarters.

Take a look at the chart below, courtesy of Andrew Mitchel, an international tax attorney who has been manually tallying the lists of expatriates published in the Federal Register. The chart is taken from his blog:

DESCRIPTIONSource: Andrew Mitchel; Treasury Department

A total of 499 Americans renounced their citizenship during the first quarter of this year. The number of people expatriating during the first quarter in each of the previous seven years averaged 115.

Now I’m sure a few readers are going to blame “ObamaCare” for this burst of expatriation. Mr. Mitchel, however, suggests that two technical tax-related changes inspired more people to give up their citizenship.

He writes in an e-mail:

First, in 2008 the expatriation rules were changed. There is no longer the 10 year U.S. tax return filing requirement. Although there is now a mark-to-market regime triggering gains upon expatriation, up to $636,000 of gain can generally be excluded for individuals expatriating in 2011 (the amount is annually adjusted for inflation). Further, non-U.S. citizen, nonresidents can now annually visit the U.S. for 120 or more days without becoming taxed as U.S. residents (under the pre-2008 rules, visits to the U.S. for more than 30 days during any of the 10 years following expatriation caused the individual to be treated as a U.S. resident for that year).

With the $636,000 exclusion from the mark-to-market gain, many individuals can expatriate without paying any U.S. tax. It is important to note, however, that some individuals, especially those with assets in foreign pension plans, may unexpectedly pay more tax than they realize. The circumstances of each individual considering expatriation must be closely analyzed to determine the amount of U.S. tax that will be due upon expatriation.

The second reason for the increase in expatriations, I believe, is the recent publicity regarding the penalties and voluntary disclosures for failing to report offshore bank and other financial accounts. The U.S. tax rules for U.S. citizens living overseas can be quite complex. The increase in awareness of the penalties has caused many individuals with dual citizenship to conclude that their U.S. citizenship is not worth the stress and hassle of the U.S. tax filing rules. The U.S. is almost the only country in the world that requires its citizens that live permanently in another country to continue to file tax returns in the country of citizenship. Combine the U.S. tax return filing complexities with the potentially bankrupting penalties for failing to report certain items, and many individuals conclude that their lives would improve by shedding their U.S. citizenship.

Article source: http://feeds.nytimes.com/click.phdo?i=351e215d7039fb59e7de75642c1711fb