Zynga Inc (
settled a trademark lawsuit against the makers of
Bang With Friends
. Zynga had alleged that the web application violated its
trademark of "with friends", that it uses in a number of games
Words With Friends
Chess With Friends
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Although the details of the settlement were not made public,
Bang With Friends
accepted Zynga's trademark right. The application has agreed to
change its name and rebrand its service offering going forward.
This is the third lawsuit Zynga settled this year.
The company recently settled a case with one of its former
employees and KIXEYE Inc. In Oct 2012, it sued Alan Patmore,
former general manager of Cityville, for stealing 760 documents
related to unreleased games at the time of leaving Zynga for
KIXEYE. Although Zynga settled with both the defendants, terms of
the settlement were not disclosed publicly, except that Alan
Patmore had apologized for his conduct.
Zynga also settled a lawsuit with game developer
Electronic Arts (
over the allegation that the former's
games copied some major features of the latter's
in February this year. We believe that the settlements remove a
major overhang on Zynga, as it will lower the company's overall
Zynga has been struggling a lot in recent times, particularly
after the company's decision to not enter the online-gambling
business in the United States. Due to its troubled business
fundamentals, Zynga expects its third-quarter sales and earnings
to be short of street expectations.
Although Zynga is the developer of the famous
Facebook Inc. (
, it has been unable to build a loyal customer base, leading to a
drop in revenues. The company witnessed a decline in its daily
active user base by 45% to 39 million during the second quarter,
which is one of the main reasons behind the bleak third-quarter
Zynga has been trying to boost its competitive position in the
mobile gaming segment through the launch of mobile games for
iOS platform. To revive growth, Zynga has undertaken several
cost-cutting initiatives, which include spending cuts in
technology outside services, and reduction in labor and marketing
However, we believe that these strategies will take some time to
positively affect the stock price. Moreover, a fragmented gaming
market and stiff competition are the primary headwinds in the
Currently, Zynga has a Zacks Rank #3 (Hold).