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Zynga Bullish Call Prompts ‘Embarrassed’ Analyst to Apologize

Zynga Analyst Tells Clients He’s ‘Embarrassed’ for Bullish Call
Zynga, based in San Francisco, makes money by selling virtual goods within its games -- a gun in “Mafia Wars” or a tractor in “FarmVille.” Photographer: David Paul Morris/Bloomberg

Richard Greenfield, an analyst who covers Zynga Inc., downgraded the maker of social games and apologized for overestimating earnings after the company reported revenue and profit that missed projections.

In a note titled “We Are Sorry and Embarrassed by Our Mistake,” the BTIG LLC analyst downgraded Zynga to neutral from buy after the company showed it’s making less money from individual users than he expected,’s Tech Blog reported.

“We firmly believed that the small fraction of Zynga users who pay was increasing and that monetization per user was improving,” Greenfield said in a note yesterday. “Paying players on Facebook are clearly paying less due to the mix of games.”

He added, “Our confidence in Zynga management diminished.”

Zynga, the biggest developer of games played on Facebook Inc., fell short of analysts’ second-quarter revenue and profit estimates as the company competes with a growing number of apps on the social network and mobile devices. Sales were $332.5 million, less than analysts’ average estimate of $343.1 million, according to data compiled by Bloomberg. Profit excluding some items was 1 cent a share, less than the 6-cent estimate.

Zynga, based in San Francisco, makes money by selling virtual goods within its games -- a gun in “Mafia Wars” or a tractor in “FarmVille.” Greenfield revised his earnings projection for the full year to 7 cents, down from 31 cents. The new estimate would represent a 70 percent drop from last year.

A jump in monthly unique players was driven primarily by “Draw Something,” a mobile game Zynga acquired earlier this year for $200 million that doesn’t generate much revenue, Greenfield said.

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