Shares of online game company Zynga dropped almost 15 percent today before recovering modestly after its CEO was less than enthusiastic, or clear, about the company’s revenues and long-term outlook, and news surfaced of three more executive departures. The company ended the day down 33 cents, or just over 10 percent, at $2.94 a share.
The problematic comments came from Don Mattrick, who joined the company nearly a year ago after heading Microsoft’s XBox unit for six years. He told the Bank of America Merrill Lynch tech conference, “We’re nowhere near where we should be when we ultimately have executed,” according to a transcript. He said the company is investing in growth, which is hold holding back margins, then he added that “we can do better on margins and EBITDA, no doubt about it.” Mattrick also was vague about the company’s product pipeline, touting only the company’s “great balance sheet” but saying nothing about actual coming titles coming, a bit of a surprise ahead of next week’s big E3 videogame conference, where most companies showcase their titles for the year ahead. Afterward, shares dropped as much as 14.8 percent, to as little as $2.735 at midday, before recovering about a third of the loss. Investors also may have been alarmed by news of three more executive departures, including Travis Boatman, Terence Fung, who headed acquisitions and Steve Chiang, who headed the company’s original blockbuster, the “Ville” franchise that has been so big on Facebook and elsewhere in various iterations. The company’s CFO, Mark Vranesh, departed in April.
Analyst Arvind Bhatia at research firm Sterne Agee wrote that because Mattrick provided no information on Zynga’s game plans, his “evasiveness” is likely to make investors more concerned. Bhatia kept a Neutral rating on the shares.