Zynga just preannounced its third-quarter results. They’re awful. There’s one glaring reason why.Zynga has admitted that it spent way too much to buy OMGPOP, the maker of Draw Something, a popular mobile app.
It spent $183 million in cash on the startup earlier this year. We wondered if it was cheap at the time. It wasn’t. Zynga is now planning to take a writeoff of between $85 million and $95 million on that purchase.
Zynga needed to do something dramatic to boost its presence in mobile. In its announcement, it touted the fact that it now has three out of the top five mobile games as measured by ComScore. But now it’s obvious it overspent to gain that position.