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Saturday, 17 December 2011

Zynga falls below IPO price for first day of trading

Zynga's share price popped at $11 for the first trade, after being delayed for 20 minutes for the first trade. The stock price represents a 10% jump for the game marker company. However, this small rise in stock price is nothing as compared to the rise for hot stocks like Google when they first listed.

Zynga shares ended lower for the first trading day at $9.50, trading as low as $9 at one point.

The fall in share price was predictable given the weak market outlook and the weak fundamentals that the company has as pointed out by an analyst that they derive over 95% of their revenue from Facebook and sales of in-game items.

Neither are their peers faring well, with Groupon and Pandora hovering near their IPO prices. Zynga if successful would have a share performance which is similar to that of other game markers like EA and Take-Two, with performance very tied to the success of their games which is hihgly unpredictable. Unlike Google which has a product that is used by many and is a cash cow likewise Microsoft's Windows and Office with their enterprise customers.

Advice for investors is that unless you are an expert in trading game markers, avoid this stock as you would likely get burned.

Thursday, 15 December 2011

Zynga and Jive IPO

GBoth Jive software and Zynga is set to go live this week, with Jive being on the stock market just recently and Zynga to be listed on Friday.

Jive Software Inc. (NASDAQ:JIVE) raised $161.3 million in its initial public offering, 38 percent more than first sought after pricing the shares above the marketed range.

The company, which makes social-networking software for businesses, sold 13.4 million shares at $12 apiece yesterday. It had planned to offer 11.7 million for $8 to $10 each, according to regulatory filings. The stock started trading 2 days ago on the Nasdaq under the symbol JIVE.

Its software allows employees to collaborate on projects and communicate with customers. Revenue at the company, which counts NetApp Inc. (NASDAQ:NTAP), Nike (NYSE:NKE), and Hewlett-Packard (NYSE:HPQ) among its clients, has surged in the past three years.

Jive’s net losses widened to $38.1 million in the first nine months of 2011, from $20.9 million a year earlier, while sales climbed 73 percent to $54.8 million. The top end of the originally proposed IPO range valued Jive at $573 million, or 8.3 times sales in the year through September 30. Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM), both named as competitors in Jive’s IPO filing, had a ratio of 3 and 2.1 for the year through September, respectively.

Zynga's sales more than doubled through September, to $829 million, and it has earned $121 million since the start of 2010, according to its SEC filing. What is more, the top five games on Facebook are Zynga titles: CityVille, CastleVille, FarmVille, Zynga Poker and Words With Friends.

For investors, this is a warning not to participate in this company. Other competitors like Microsoft is set to enter the market and strangle it to death. In addition, it's track record is worse than Zynga which has doubled sales through September, to $829 million, and it has earned $121 million since the start of 2010, according to its SEC filing. Despite the initial pop that Jive have and is now trading at $15, $3 more than it's IPO price of $12. Given the current market situation, it is set to fall below it's IPO price soon. 

Either is Zynga a good stock to hold in the future. It's overreliance on Facebook as it's main revenue stream is far too risky. In addition, user activity has fallen for some of the games that they have said to be the top 5 games on Facebook. 

Zynga's business model may do good in an recession as it allows users to pay small amount of money to feel good. However, given that the traffic growth for their games would slow over time and that current paying users would get bored after a while, it is difficult to keep coming out with new items and themes to attract users to part with their money without making the games being too bloated. The revenue from advertising is way too little to replace the revenue from the sale of it's products. In addition, advertising revenue is fluctuates quickly with the economic cycles and is typically the department to be cut. 

Given the strong hype over the two IPO, one may try to profit from the initial spike in share price. However for the long run, I would not put this two shares in my portfolio. 

Sunday, 4 December 2011

The insides of the Standard Charted Marathon (Timing System)

I went to work in the timing section for the Standard Charted Marathon 2011. It was under iSports Pte Ltd. The experience was cool and something that one would never realise the hardwork that it takes to run the event unless one becomes the backstage crew and support such events. U arrived at their office as early as 4.30PM on Saturday to get the timing mats loaded on the truck. After loading up the mats, we were briefed on the roues that we had to go before getting our dinner and setting off at 8PM to deliver the mats to it's various locations During the delivery process, there were little hiccups as there was a slight drizzle which helped to reduce the traffic along East Coast Park Expressway. The little hiccups that happened along the way was the repaving of the road that we require to pass in order to deliver the mats at Gardens by the Bay and the closing of the gate at the other alternative routes. The other hiccup was that there was a mat that was odd-shaped, hence we had to get it replaced. We ended our work at 1.30AM, which was considered quite early. Afterwhich, we retreated in our car and parked in an open-air carpark and slept until the next morning at about 4.40AM at which we had to prepare to collect the mats from those that have started the full marathon. We started collecting the maps at 5.50AM, whereby the last runner was being declared. We proceeded with breakfast afterwhich, it was kindly sponsored my our team leader Jason (Muffin) from iSports. Afterwhich, we proceeded to East Coast park to collect one of the first few mats. We were all very tired and slept during the car ride. The wait at East Coast park was long as the diversion was delayed by an hour. We ended 2 hours before planned and went home from iSport's office afterwhich. Kudos to the backstage crews working quietly to make this event a success. I did not know the amount of backscene work when I ran for my 10KM run 2 years ago!