As growth continues to slow in Farmville's hometown, better
known as Zynga (NASDAQ:
), Chief Operating Officer John Schappert may have
lost his role
- one that required growth revival for the floundering company
along with product oversight. The news coincides with two lawsuits
that shareholders recently filed against the game maker, claiming
that it kept
a secret from those invested.
According to Businessweek, Schappert's loss of creative control
is part of an overhaul that Chief Executive Officer Mark Pincus
started in early July. While the news has yet to be confirmed by
Zynga itself, Schappert has, "lost support within the company and
taken some of the blame for underperformance."
As anti-climactic as an overhaul may seem, it is certainly
interesting that Zynga chose to cut Schappert's duties as the
company once felt he was so right for the job that it lured him
away from his previous position at Electronic Arts (NYSE:
) just about one year ago. However, Zynga shares are down almost 70
percent in just the last 365 days alone, signaling that something
definitely needs to change for the company to stay afloat.
Investors have taken notice to the problems plaguing the social
game service as well, placing direct blame on the company's lack of
Two stockholders in specific are, "taking the company to task
for allegedly concealing threats to its business and sales growth,
such as Facebook platform changes that made it easier for users to
find rival games," Reuters reports.
The lawsuit follows Zynga's dismal full year outlook, as the
company slashed 2012 EBITDA guidance in half during its second
quarter earnings report on July 26. While surely much of the
responsibility concerning declined bookings and poor results in
general can be tagged to the game maker's management, Facebook
) has played a part in bringing down its infamous gaming
Fortunately for the social network, lawsuit-happy shareholders
do not care to punish both companies. Zynga is taking the brunt of
the heat for "misrepresenting" or "failing to disclose material
adverse facts" to investors.
The innovator behind Mafia Wars and Petville has a lot of
explaining to do, and clearly some managerial changes to make. As
analysts and shareholders await comment from the company itself,
Zynga continues on its steadily decline.
Zynga closed Tuesday at $2.95, down 68.65 percent
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
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