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Zynga Raised $1 Billion Credit Line In July
- richcollins 15y agoCan anyone explain why they might need "additional cushion"? I thought Zynga was wildly profitable.
- suking 15y agoIf a credit line has a really low interest rate - why the hell not?
- richcollins 15y agoBecause cash on hand has a zero interest rate. You think Apple uses credit lines?
- adw 15y agoCash on hand has a negative interest rate. That's what inflation is. If you can get credit at below the rate of inflation it's actually free money.
- richcollins 15y agoAssuming that you actually invest it in something with returns higher than the interest rate. Also, it will still be more expensive than making the same investment with your cash on hand. It only works if you have both in play.
- richcollins 15y agoFound the answer. They aren't very profitable: http://www.businessinsider.com/chart-of-the-day-zynga-revenue-net-income-2011-7 http://www.businessinsider.com/chart-of-the-day-zynga-revenu...
- gsmaverick 15y agoRead the details. It has to do with the way GAAP applies to virtual goods. GAAP makes you book the revenue over the "estimated average life" of the good whereas Zynga's non-GAAP measurements book the revenue all up front when the good is sold.
- r00fus 15y agoSo according to this chart, Zynga's revenue growth is linear, but profits are flat. Also, Zynga's revenue is non-GAAP (but not hiding material costs like Groupon's ACSOI).
- r00fus 15y agoExpansion to Google+ Games? Zynga Poker (among other games) is highlighted by the googleblogs entry.
- georgieporgie 15y agoThis and Groupon make me think "Web 1.0" was when we knew how to get users, "Web 2.0" is/was when we know how to get revenue, and "Web 3.0" will be when we figure out how to turn a profit.
- deleted 15y ago[deleted]
- danteembermage 15y agoFor public companies committed lines of credit are very common, probably more so than public bonds if you look at the universe of publicly traded firms. Why they get them is not entirely clear, liquidity insurance is the obvious answer but there could be others e.g. reputation building or establishing banking relationships. Having a billion dollars of credit and using it responsibly can be a good signal. These things are really cheap too, good rates and very small commitment fees (1/4% per $ per year or so).