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Mike Verdu is leaving Zynga, becoming the third time this month an executive has departed
Zynga stock was hit hard last month after a disappointing earnings report, leading to some desperate measures on the part of the company to retain its staff. So far those efforts seem to be failing. For the third time this month an executive at the game development company is leaving.
Chief Creative Officer Mike Verdu announced Tuesday that, after three years, he is leaving Zynga to start his own company.
“I'm very proud of my part in building this remarkable company, especially in growing and nurturing what has become a vibrant community of game designers, producers, and creative leaders,” Verdu said in the blog post.
“Now, however, it's time for me to try something new. Being at Zynga in the early days reminded me of how much I love being an entrepreneur. After a lot of soul-searching, I have decided to go back to my roots and start a new company.”
Zynga CEO Mark Pincus released a statement to the media in which he praised Verdu, and said that Zynga will “be on the ground floor” of Verdu’s new company.
"Mike has been a good friend to me personally as well as professionally and has been an influential creative leader to us all," Pincus said.
"I'm proud of the legacy that Mike has helped build and the deep bench of creative talent and leaders who will carry the torch and shape the next wave of creativity at Zynga."
Verdu did not make any announcements about his new company.
Just the latest to leave
Verdu is just the latest executive at Zynga to quit. Chief Operating Officer John Schappert quit earlier this month, followed by Alan Patmore, general manager of CityVille, who left to work at Kixeye.
Erik Bethke, general manager of Mafia Wars 2, Ya-Bing Chu, a VP in Zynga’s mobile division, and Jeremy Strauser, a general manager, also left the company this summer.
This mass exodus follows a devastating drop in stock following a lower than expected quarterly earnings report in July.
Last month, Zynga reported a loss of 3 cents a share, or a 1 cent profit on an adjusted basis, on revenue of that grew 19% to $332 million, far short of analysts' expectations of 5 cents a share on revenue of $345 million. Zynga also sharply reduced its forecast, dropping its full-year bookings to $1.15 billion to $1.23 billion. Zynga had previously estimated bookings to be $1.43 billion to $1.5 billion.
As a result, Zynga stock dropped 40% in a single day.
Also, after taking the hit on its stock, Zynga was then accused of insider trading when it was revealed that executives, and major investors, had sold off a significant amount of stock months before it crashed.
The company was then hit with a lawsuit by Electronic Arts, who claimed that Zynga has plagiarized EA’s signature game, The Sims Social, with its new game, called The Ville.
Zynga tried to prevent its staff from leaving by offering stock options to all employees.
According to Zynga’s form S-8, the company set aside 43,295,554 shares for its employees, at prices from $2.53 to $2.97 per share.
Zynga stock was down nearly 1% in after hours trading on Tuesday, ending at $3.05 down from its $10 IPO in December.
Trying to retain staff with such weak performing stock may be a clue as to why the plan does not seem to have worked.
(Image source: mycnc.org)
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.