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Zynga Posts a Surprise Profit and Big Revenue Beat

Zynga, the maker of online games such as FarmVille, posted an unexpected profit for the fourth quarter and beat big on revenue as it showed signs of coping with the exodus of online gamers.

After the earnings announcement, the online game maker's shares rose more than 5 percent in extended-hours trading. (Click here to get the latest quotes for Zynga.)

Zynga reported a net loss for the quarter of $48.6 million, or 6 cents per share, an improvement from last year's loss of $435 million, or $1.22, in the same period.

Earnings excluding items were 1 cent per share, down from 5 cents a share in the year-earlier period.

Revenue dropped 15 percent to $261 million from $307 million a year ago.

However, both earnings and revenue beat expectations: Analysts had expected a loss of 3 cents per share on revenue of $212 million, according to a consensus estimate from Thomson Reuters.

Mark Pincus, chairman and chief executive officer of Zynga Inc., speaks during an event at Zynga Inc. headquarters in San Francisco, California, U.S.
David Paul Morris | Bloomberg | Getty Images
Mark Pincus, chairman and chief executive officer of Zynga Inc., speaks during an event at Zynga Inc. headquarters in San Francisco, California, U.S.

For the first quarter, Zynga is now projecting revenue of $255 million to $265 million, and a loss between 2 cents to 4 cents per share. Analysts currently expect a loss of about 1 cent a share on revenue of $240 million, according to Thomson Reuters.

Zynga got an unexpected boost on Tuesday morning as Bank of America Merrill Lynch analyst Justin Post raised his price target for Zynga shares to $3.40 from $2.70 and raised his rating to "buy" from "underperform," skipping an entire level. He cited asset value and Zynga's mobile business as the source of his optimism.

The game maker has struggled to tighten up its ship. In October, Zynga'a chief executive, Mark Pincus, laid off staff and announced $200 million in stock buybacks after the company forecast a loss for the December quarter.

— Reuters contributed to this article

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