Today's Earnings Preview: Can Zynga Inc. (Nasdaq: ZNGA) Loosen its Facebook Ties?

Zynga Inc. (Nasdaq: ZNGA) will report earnings for the first time today (Tuesday) since going public, and investors want to see if Zynga has a future plan for profits that isn't tightly pinned to Facebook Inc.

Zynga is the largest social gamer in the world, behind FarmVille, CityVille, Mafia Wars, and Words with Friends. It has 230 million active monthly users, but growth slowed in the end of 2011 because of few new hit games released.

Zynga debuted its $1 billion IPO in December. It listed its relationship with Facebook under risks associated with the business in its IPO filing.

Zynga Inc.
History (Nasdaq: ZNGA)

Wall Street expects the Zynga earnings report to show profit of 3 cents per share on revenue of $301.1 million for the fiscal fourth quarter. That would be a 54% revenue gain from the last quarter of 2010.

Zynga is profitable, unlike some of its social media-related counterparts, but the question is, can it build a company that's not so reliant on Facebook?

The Zynga Inc. (Nasdaq: ZNGA) Facebook Connection

Zynga relies heavily on Facebook. Mark Zuckerberg's social media giant accounts for 94% of Zynga's revenue, and is Zynga's biggest source of user growth. Facebook allows Zynga game players to invite friends to play with them, reaching Facebook's 845 million subscribers.

Facebook also needs Zynga. Facebook gets a 30% cut of what users spend while playing Zynga games - almost $450 million in 2011, or 12% of Facebook's annual revenue.

"Facebook is the dog, Zynga is the tail, the question is to what extent does the tail wag the dog," Gartner analyst Ray Valdez told American Public Media's "Marketplace."

Zynga can profit from the relationship if loyal Facebook users stay active, but it needs to branch out for more reliable growth, and has started to do so.

Zynga last year released 10 games to run on the Apple Inc. (Nasdaq: AAPL) iPhone and phones running Google Inc.'s (Nasdaq: GOOG) Android platform. Zynga's mobile users increased tenfold from November 2010 to September 2011.

Zynga also plans to launch this year its own gaming network, Zynga Direct.

The company also announced last week it plans to team with toymaker Hasbro Inc. (Nasdaq: HAS). It wants to capitalize on people's desire to play their favorite mobile and online games in an old school board-game format.

"People are learning about games, engaging in them, and then they actually want to play them in the real world, sitting across the table from someone," industry analyst Chris Byrne told "Marketplace."

While Zynga has solid plans for user growth, they key to its success is to make sure it can keep raking in revenue from those game players.

Zynga had a rocky start when it started trading Dec. 16. It tumbled 5% in its first trading day, but has since climbed 41% to yesterday's (Monday's) $13.42 closing price. Zynga will report earnings after the bell today.

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