The legal battle between Zynga (Nasdsaq: ZNGA) and Electronic Arts
Last month it was EA alleging that Zynga's The Ville was infringing on the copyrights protecting its own The Sims Social. These are two of the most popular games on Facebook
Zynga countersued on Friday, alleging that EA's CEO was seeking to bar Zynga from hiring EA employees after losing many executives and developers to the social-gaming leader. These "no-hire" agreements are illegal in California.
The timing of the countersuit is ironic, since it's Zynga that's having a problem keeping its employees, and that includes former EA executives.
Zynga has seen a whopping eight executives resign this summer. Whether it's Zynga's decaying stock price since going public at $10 back in December, working conditions at the company, or just the growth prospects of social gaming in general, this isn't the company's finest hour. It may seem silly to see Zynga portray itself as the market darling that traditional video-game executives want to work for, but we're obviously talking about the past here. Just last summer -- shortly after Zynga filed to go public -- analysts were throwing out valuations as rich as $20 billion. That would be more than Activision Blizzard and EA combined.
Zynga's valuation is a more somber $2.4 billion these days, and a good chunk of that amount is backed by cash raised during the IPO.
Zynga's come a long way, and that's no longer a compliment.
Playing to win
It seems as if everybody wants to be Zynga, even though the social-gaming pioneer appears to be unloved at the moment. A new premium report is available detailing Zynga's challenges and opportunities. Want more? The report includes a free year of updates. Click here to read it now.
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Longtime Fool contributor Rick Munarriz was never much of a farmer. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has a disclosure policy.