February 5, 2013 / 10:58 PM / 5 years ago

Zynga profit tops views, but it forecasts lower revenue

SAN FRANCISCO (Reuters) - Zynga Inc (ZNGA.O), the one-time Silicon Valley darling that has been wrestling with a months-long exodus of online gamers, reported an unexpected fourth-quarter profit on Tuesday,

The corporate logo of Zynga Inc, the social network game development company, is shown at its headquarters in San Francisco, California April 26, 2012. REUTERS/Robert Galbraith/Files

Revenue was virtually flat from a year ago, but was down from the prior quarter. And Zynga’s underlying business appeared to be continuing its downward slide, as the maker of “CityVille 2” and other games projected revenue could shrink for a third sequential quarter.

The game maker reported a quarterly profit of 1 cent per share on an adjusted basis, beating expectations for a loss of 3 cents per share, according to analysts polled by Thomson Reuters I/B/E/S.

Shares of Zynga rose 5.8 percent to $2.90 in after-hours trade on the results.

Fourth-quarter revenues were $311 million, virtually unchanged from a year ago.

Zynga forecast revenue for the first quarter of 2013 of between $255 million and $265 million, a roughly 20 percent drop from the same quarter in 2012.

Once hailed as one of Silicon Valley’s fastest growing companies, Zynga suffered a dramatic reversal in 2012, when users began to abandon its once-popular games like “CityVille.” The company was also caught off-guard by a sea change in consumer behavior, as people spent more time on their mobile phones instead of desktop computers - the platform for most of Zynga’s most lucrative, Facebook-based (FB.O) games.

During the quarter, Zynga’s daily active users fell to 56 million, down from a high of 72 million in the second quarter of 2012.

In October, Zynga‘a chief executive, Mark Pincus, laid off staff and announced $200 million in stock buybacks after the company forecast a loss for the December quarter.

He has also vowed to make smartphone-based games a centerpiece of Zynga’s line-up.

Reporting By Gerry Shih; Editing by Leslie Adler

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