Zynga cracks open can-o-gloom all over 2012 outlook

OMG, OMGPOP went pop

Zynga's shares took a dive after the social gamer announced that it was writing off half the value of OMGPOP, the developer of Draw Something acquired earlier this year.

The social gaming firm cut its outlook for the year for the second time and said it expects a loss in the third quarter while also slashing up to $95m off OMGPOP's acquisition value of $182m.

Zynga pounced on the developer when its doodling game Draw Something was hugely popular, but the one-hit wonder was short-lived and it has since failed to help Zynga look like a great investment.

The game firm is now expecting a net loss of between $90m and $105m in the third quarter and its earnings in the full year to fall to between $147m and $162m instead of the $180m to $250m it previously anticipated.

Zynga chief Mark Pincus attempted to put a good spin on things on a company blog post, saying that the firm would counter its challenges with further investment in genres like casino, where it already has Zynga Poker, and player versus player games like Mafia Wars.

"There are a few factors contributing to a weaker than expected outlook for Q4," he wrote. "The reduced performance of some of our live web games is continuing to impact results and we have several new games which are at risk of launching later than expected."

"[But] let’s not lose sight of the bigger picture. The world is playing games, and is increasingly choosing social games. Zynga has become synonymous with social gaming serving 311 million monthly active users, the largest player network on web and mobile. When we offer our players highly engaging content they respond."

The company is still strong in the game that made it famous, FarmVille, and it's capitalised on that success with CastleVille and then FarmVille 2. Zynga says it still has 311 million monthly active users.

Zynga's shares fell 18 per cent to $2.31 after the announcement but has since recovered slightly to $2.48. ®