Zynga Admits Overpaying for ‘Draw Something,’ Offers Weak Forecast

Zynga is predicting net annual losses of between $90 and $105 million in its preliminary third quarter earnings report

Last Updated: October 4, 2012 @ 5:50 PM

Zynga conceded to investors Thursday that it overpaid for OMGPOP, the maker of the social game "Draw Something," and projected weak preliminary results for the third quarter earnings report.

Getty ImagesWhen Zynga bought the firm for $183 million in March, "Draw Something" was on a roll generating $250,000 per day or about $91 million a year.  But it slipped into steady decline not long after Zynga bought it.

Now, Zynga is planning to write the value of the startup down to between $85 million and $95 million. 

Because of this, Zynga is reporting a net loss of between $90 million and $105 million for the year.

The March purchase of OMGPOP came months after Zynga's weak initial public offering sent the gaming studio's top brass scrambling to gain a foothold in the fast-surging mobile market.

San Francisco-based Zynga rose to prominence as the maker of addictive Facebook social games, such as "FarmVille" and "Bubble Safari."

Also read: Zynga Loses Two More Executives

"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," Mark Pincus, Zynga's CEO and founder, said in a statement to investors.

It has been part of a trying year for Zynga.

Also read: Zynga Acquires Game Studio A Bit Lucky

Since July, at least seven executives have either jumped ship or were forced out, including the chief creative officer and chief operating officer.

In an attempt to allay shareholders' concerns, Zynga acquired the "mid-core" game studio A Bit Lucky last month.

Zynga's stock closed Thursday at $2.81, up .54 percent.