Zynga (ZNGA) just got a lot better-looking.
Considering the social-game maker has turned into a burning platform — its games on Facebook (FB) have been deteriorating, and mobile titles have mostly been duds — founder and CEO Mark Pincus had to do something.
Yesterday, Pincus decided that something was stepping aside.
His replacement, Don Mattrick, is a big win for the company. Back in 2007, Mattrick took the reigns of Microsoft’s (MSFT) Xbox 360 and propelled it into the spotlight. The business became profitable, and the current Xbox has been the No. 1-selling console for 29 straight months.
In light of this, it should be no surprise that investors are extremely excited about Mattrick’s move — shares have surged roughly 20% since the announcement.
Mattrick isn’t wasting much time before jumping into the fray — he will officially start his job next Monday, and is attending a Zynga all-hands-on-deck meeting today.
Mattrick has more than three decades in the gaming business. He launched his first startup at the fresh age of 17, then sold it to Electronic Arts (EA). While there, he helped to build franchises like FIFA, Need for Speed, Harry Potter and The Sims.
So yes, Mattrick know how to create great products. He also has experience managing large organizations, like the 7,000 employees at Xbox — experience that will be crucial for getting Zynga back into the game.
To Pincus’ credit, he wasn’t a total failure.
The former CEO took tough steps to restructure Zynga. Back in June, he announced an 18% slashing of the work force and also shuttered various offices and titles. Still, cuts really weren’t enough. Not to mention, Pincus hired many of the people at Zynga, and was probably just too close to the company to be objective. That won’t be an issue with Mattrick, who can make tough calls and enters Zynga with a fresh perspective.
Pincus also did something few entrepreneurs have done — create a multibillion-dollar operation. But sometimes the abilities needed to start a company don’t aren’t the same ones needed to run it — rarely does anyone have both, and when they do, they reach star status (a la Jeff Bezos or Bill Gates).
And maybe most importantly — he didn’t blind himself to reality. Pincus saw change was needed, even if that meant a changing of the guard. That’s no easy decision, but Pincus has said he wants Zynga to be an enduring company … and apparently, he means it.
Meanwhile, Mattrick isn’t walking into an empty pantry. Zynga still gets a whopping 52 million active daily users and has great brands like FarmVille and Zynga Poker. It also has potential in the real-money gaming business, and has already forged ventures in Europe to test out this business. Plus, the company has a little wiggle room for M&A thanks to $1.3 billion in the bank.
But there’s no need to rush into the stock. Mattrick will need time to analyze Zynga’s core problems, put together a plan and get things moving in the right direction. Still, watch the stock closely for a decent entry point — given Mattrick’s background, he’s got a good shot at making Zynga a success once more.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
