Zynga Inc (ZNGA): Mobile Is Destroying This Company, But Others Are Doing Better

Google’s Motorola acquisition hasn’t been as profitable. Motorola posted a $271 million dollar GAAP operating loss in Q1, 2013. In the long run, Google Inc (NASDAQ:GOOG)’s purchase of Motorola will give Google leverage in the manufacturing side of mobile computing. While Motorola isn’t currently helping Google’s bottom line, Google has cash to spare. It has a ROI of 17.9%, EBIT margin of 25.3%, and profit margin 26.3%.

Facebook Inc (NASDAQ:FB) has also struggled with mobile, but even Mark Zuckerberg’s creation has executed better than Zynga Inc (NASDAQ:ZNGA). Recently, Facebook revamped its social product and started to display ads to its mobile users. It recently bought Parse, a hosting company for a host of mobile apps. Facebook also purchased the mobile photosharing app Instagram. This app helps people to share their photos with their friends. Facebook Inc (NASDAQ:FB) paid a pretty price for Instagram to ensure that users’ photos stay within the Facebook ecosystem.

Facebook is nowhere near as profitable as Google Inc (NASDAQ:GOOG), but it is in a much better position than Zynga Inc (NASDAQ:ZNGA). Facebook Inc (NASDAQ:FB) has an EBIT margin of 9.4%, but its ROI is only 0.1% and its profit margin is 0.3%.

Conclusion

Zynga Inc (NASDAQ:ZNGA)’s future is bleak. The company isn’t profitable and is bleeding users. Until things change, Zynga is best avoided.

Google Inc (NASDAQ:GOOG) is profitable and it has made a number of strategic acquisitions to achieve a strong position in the mobile sphere. While its Motorola acquisition still isn’t making money, investors can be rest assured that Google has the resources and expertise to use Motorola as a strategic weapon to gain leverage over other smartphone manufactures. Facebook Inc (NASDAQ:FB) isn’t very profitable, and for the time being, investors would be better off sticking with Google Inc (NASDAQ:GOOG).

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google Inc (NASDAQ:GOOG). The Motley Fool owns shares of Facebook Inc (NASDAQ:FB) and Google.

The article Mobile Is Destroying This Company, But Others Are Doing Better originally appeared on Fool.com.

Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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