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Should Mark Pincus Take Zynga Private?

With all the negative swirl around Zynga — its prospects worsened last week after the social games company admitted that its business was deteriorating faster than expected — one of the more interesting possibilities being debated quietly among some players in Silicon Valley is whether it might opt to go private to get some much-needed breathing room.

It’s the latest of several options that have been floated, including whether Facebook or others might try to swoop in to buy the company.

Most of these scenarios are moot, given Zynga’s founder and CEO Mark Pincus controls the troubled company, owning more than half of its shares. It is not clear if he would be willing to give up now.

That said, he has do something — the company’s stock hit a new low on Friday, tumbling 12 percent to $2.48 a share. At that price, investors are valuing the business at very little, since Zynga has the equivalent of $2.10 a share in hard assets.

That price could get lower, with Wall Street investors and many others becoming even more relentless in their criticism of Zynga.


In a memo issued to employees on Friday, Pincus wrote that he was disappointed and is focused on rectifying the situation.

In the near term, he said it might mean considering “targeted” cost reductions. And in the longer term, he noted that Zynga would have to invest more in mobile and a platform approach that enables it to publish third-party game titles.

Whether he can do that easily with intense shareholder scrutiny is questionable, and ditching the public markets would have its advantages.

To get a sense of where Zynga stands, and whether going private is feasible, I talked to a handful of analysts and experts, all whom had mixed opinions.
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