Posted March 13, 2013 by Karen Kinsey in Technology

Will Zynga Inc (NASDAQ:ZNGA) be a good buy for Yahoo! Inc. (NASDAQ:YHOO)- AAPL, EA, FB, GLUU

Northern, WI 03/13/2013 (avauncer) - Zynga Inc (NASDAQ:ZNGA) is a targeted interest of Yahoo! Inc. (NASDAQ:YHOO). News of a possible acquisition of Zynga Inc by Yahoo! Inc. has caused the company’s shares to close around $4 per share. The company has a market capitalization of around $3 billion and has jumped in price in recent days on the basis of the Yahoo! Inc. rumor.

Zynga Inc is a San Francisco, California based developer of online games, found mainly on social networking sites. Popular titles such as Farmville and Words with Friends are a big revenue earner for the company and sites such as Facebook Inc (NASDAQ:FB) and a big part of the Apple Inc. (NASDAQ:AAPL) App Store downloads for its iPhone and iPad devices.

Similar gaming giant, Electronic Arts Inc. (NYSE:EA), a Redwood City, California developer of gaming software titles such as Sim City and its various pro sports leagues franchises (i.e. MLB, NHL and NFL) under the banner EA Sports, is moving close to its 52 week high, closing previously at around $19 per share. The company has a market capitalization of $5 billion, nearly twice that of Zynga Inc.

Electronic Arts Inc. earnings have been off, taking a huge dip in the third quarter of 2012 before stabilizing and moving around 800% in the opposite direction. The company has a high level of debt, with a debt to equity ratio of 157%. This is nearly 4 times higher than the debt to equity ratio of Zynga Inc, which is 41%.

A smaller emerging gaming company, Glu Mobile Inc. (NASDAQ:GLUU) is seeing reverse fortunes than those of Electronic Arts. The San Francisco, California based mobile gaming developer has a market capitalization of $187 million and is trading at around $3, up around 17% over its previous close.

Glu Mobile Inc. is showing a quick ratio of around 1.22, which is less than Zynga Inc’s quick ratio of 2.74 but better than the liquidity measure of Electronic Arts Inc., whose quick ratio is 0.87. Glue Mobile Inc.’s debt position is better than Electronic Arts Inc., with respective debt to equity and debt ratios of 86% and 46%.

The popularity of the gaming applications made by Zynga Inc that are widely available through various platforms continues to drive this company’s success and increase its share value. The continued growth of its income will only continue to fuel speculation of Yahoo! Inc.’s acquisition interest. Shares of Zynga Inc (NASDAQ:ZNGA) were down by 5.11% to close at $3.73.

Karen Kinsey

Karen Kinsey with a degree in journalism. She ended up going into the education field and has been a teacher for the past six years. Karen Kinsey is a television producer, writer, editor, professor, wife, mother, sister, daughter, friend and longtime, diehard Phillies fan. Karen Kinsey writings have been featured in such mainstream media as The Guardian, USA Today, Global Times, China Daily, Beijing Review, among others.