Does Mark Pincus need to sell Zynga?Not right away, according to analysts Fortune spoke to.
But the clock is ticking, Janet Morrissey writes:
Zynga founder and chief executive Mark Pincus holds 50.15% of the voting shares in the company and has indicated several times since the company’s IPO that he has no interest in selling out. But analysts and shareholders say if the company is unable to execute on its growth plan and deliver solid quarterly results for at least two consecutive quarters over the next year, the company should field offers.
But the company has free cash flow, so it really doesn’t need to sell and it would be foolish to hand the company over to a buyer at this point.
A hit game or the legalization of online gambling in the US could also be catalysts for the stock.
The critique we’d make of this Wall Street-generated analysis: It ignores the vital role of Zynga’s talent, and the enormous challenge Zynga has in retaining top employees, especially ones it gained through acquisitions. The brothers behind the hit Words With Friends just left, for example.
Selling now would mean keeping Zynga’s still relatively large base of talent, the source of much of its value, intact.
How many more will leave in the next year, especially if Zynga doesn’t show signs of a turnaround?