Zynga has predicated a net loss of $90m (£55m) to $105m based on preliminary numbers detailed i its third quarter, which ended 30 September. Q3 revenue is expected between $300m and $305m, prompting Zynga to lower its yearly forecast to $1.085 billion (£618m) down from $1.225 billion.
"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," announced Zynga CEO Mark Pincus.
"We are continuing to invest in our mobile business where we have one of the strongest positions in the industry. These actions support our strategy to transition from being a first party web game developer to a multiplatform game network. We remain optimistic about the opportunity for social gaming and the power of our player network of 311 million monthly active users."
Zynga is blaming their purchase of Draw Something developer OMGPOP, which has halved in value since being bought in March 2012.
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Following the announcement of Zynga's preliminary numbers, its stock plummeted by 19 percent, to close yesterday at $2.82.
Zynga's shares are down more than 70 percent since the start of 2012, when they opened at $10.
Business Insider has obtained a memo from Mark Pincus, circulated to Zynga employees, explaining what the company was doing to secure its financial future:
"The challenges we faced in our web business in Q2 continued in Q3 and while many of our games achieved plan, we still experienced overall weakness in the invest and express category. To address this we're further investing in other genres like casino where we already lead with Zynga Poker and blue PVP, a category we pioneered with Mafia Wars, and now have the opportunity to reinvent with the industry's best talent here at Zynga.
"There are a few factors contributing to a weaker than expected outlook for Q4" continues Pincus. "The reduced performance of some of our live web games is continuing to impact results and we have several new games which are at risk of launching later than expected.
"Let's not lose sight of the bigger picture. When we offer our players highly engaging content they respond. FarmVille 2 has been our most successful launch since CastleVille. Our With Friends franchise is defining social play on mobile where Zynga represents 3 of the top 5 most popular mobile games in terms of time spent in the U.S. according to Nielsen. While we're encouraged by our strong starting position on mobile, developing this new growth market to the scale of our web business will take time."
The predicted loss comes only a day after Facebook, which, according to its IPO generates 12 percent of its revenue from Zynga, announced that it had reached the one billion user milestone.
After a difficult year for Zynga, during which several executive level employees have resigned, the social game developer's troubles continue.
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