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Invesco Private Capital Buys E2open and Adds to Zynga Holding

November 14, 2012 | About:
Holly LaFon

Holly LaFon

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In the third quarter, Invesco Private Capital bought one new stock for its equity portfolio, E2open Inc. (EOPN) and added to one more, Zynga Inc. (ZNGA).

Invesco bought 1,323,700 shares of E2open Inc., prior to its IPO July 26, as a private investment. In its IPO, it offered 4,687,500 shares priced at $15 per share.

E2open Inc. provides cloud-based solutions for global trading networks. On Oct. 8 it announced its financial results for its second quarter of fiscal 2013 ended Aug. 31, 2012. Its revenue was $22.9 million, a record, increased from revenue of $16.6 billion a year previously. Net income increased to $4.57 billion, an increase from $2.16 billion a year previously.

The company has cash of $43.8 million on its balance sheet, including proceeds from its IPO, an increase from $10.2 million at year-end 2012.

"E2open continued to execute at a high level during our second fiscal quarter, leading to financial results that were better than our expectations," said Mark Woodward, E2open's president and CEO. "Enterprises are increasingly demanding cloud-based supply chain solutions to improve collaboration, visibility and efficiency of their global trading networks. E2open is benefiting from this demand as a result of our market leadership position and track record of providing the solutions that support some of the largest supply chains in the world."

Invesco also added 190,320 shares to its stake in Zynga Inc. (ZNGA) for $4 each on average, which brought his total shares owned to 1,034,646. The price at which he initiated the stake in the second quarter was $8 per share on average – the stock has tumbled 77% year to date.

Zynga on Oct. 24 reported revenue increase of 3% year over year to $317 million. It also suffered a net loss of $52.7 million, compared to net income of $12.5 million a year previously. The net loss included an impairment charge of $95.5 million from intangible assets when it purchased OMGPOP and stock-based expense.

At quarter-end, Zynga had $1.6 billion in cash on its balance sheet, compared to $926.3 million a year previously.

Zynga is embarking on a cost-reduction program that will include reducing 150 employees or 5% of its workforce, “rationalize its product pipeline, reduce marketing and technology expenditures and consolidate certain facilities.”

"While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming. We're implementing a number of steps to drive long-term growth and profitability. The successful launches of FarmVille 2 and ChefVille in the third quarter demonstrate that when we develop great games, our large player audience engages. It's more clear than ever that along with search, shop, and share, play is a fundamental pillar of the Internet, and Zynga continues to be the leader," said Mark Pincus, CEO and Founder, Zynga.

Zynga has a P/E of 106.3, P/B of 0.9 and P/S of 1.5.

On other portfolio moves, Invesco sold out of his positions in MaxLinear Inc. (MXL), Ubiquiti Networks Inc. (UBNT) and Tangoe Inc. (TNGO). See the rest of its updated third-quarter portfolio here. Also check out the undervalued stocks, top growth companies and high yield stocks of Invesco.

Rating: 3.7/5 (7 votes)

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