Earnings calls underscore some of the strategies being deployed in the tech industry. Take Zynga’s Q2 earnings for example: announcing that it lost US$22.8-million, or three cents per share. In the same Quarter last year, it earned US$1.4-million a year ago. At one stage, shares were down a whopping 38%.
These numbers are hardly surprising, seeing as Zynga is notorious for copying competitor games and generally being unethical in the industry. It also went rather gung-ho into acquiring OMGPOP, the maker of Draw Something. When last did you play that? One of the worst things to happen to Facebook was FarmVille requests, and we’ve got Zynga to thank for it.
Speaking of Facebook, its shares took an eight percent knock because of its (over)reliance on this third-party. At the time Facebook IPO’d, it listed Zynga as being responsible for 12% of its revenue. Facebook also hasn’t quit figured out how to monetize their mobile effort. Piper Jaffray research suggests that if Facebook doesn’t hit its numbers, it will be a harder hit than if any other tech company missed, due to the poor performance of the IPO.
Something to ponder on, the next time you’re in the stock market.
On the other side of the valley, Google celebrated the first birthday of Google+ and defied pundits by hauling in US$2.79-billion in the same quarter. Google’s strategy of starting to link its products to the “social spine” has its staff insisting that Plus isn’t a social network but rather more of an integrated product hub.
Google’s Chief Business Partner Nikesh Arora attributes a lot of the revenue growth to increasing mobile search queries as well as Admob inventory in apps: by integrating Admob into Adwords, one million AdWords advertisers have access to the 300 000 mobile apps in the AdMob network.
What’s becoming more apparent though, is that these earnings are off the back of Google constantly pulling the algorithm and real estate strings:
The Panda update: Fellow Memeburner, Tom Foremski, has discussed how changes to the Google search algorithm are affecting the ranking of sites in the natural search results: “What used to be best practices for ensuring a high Google rank: lots of links from lots of other sites, has now turned into a massive marker pointing to an over-optimized, deceitful site.”
The real estate crunch: Google has been slowly and steadily killing off the amount of real estate it leaves for organic search on its results pages. The advent of Universal search clearly signalled that organic search results were numbered, and this example from India shows no real estate for organic results whatsoever.
What these moves show, is that Google is well seasoned when it comes to earnings calls, the CEO doesn’t even have to attend anymore, and that tech investors expect Facebook to be a lot more savvy when it comes to winning their vote.