Hot stock to watch: Social game developer Zynga (ZNGA) said on Friday that if the company refused the requirement of Electronic Arts Inc. (EA) for not recruiting the employees of the latter, Zynga will face litigation. Zynga said the requirement of EA was unreasonable and illegal, and counter-sued EA for this matter. On the back of the news, ZNGA stock price surged more than 7% on Friday.
Zynga recruited former EA executive John Schappert, as the company’s chief operating officer last year. After management restructuring of the company, Schappert was no longer responsible for Zynga’s game business operations. He quitted from Zynga last month. Jeff Karp, another former executive of EA served as Zynga’s chief marketing and revenue officer but resigned earlier this week.
On August 3, EA also filed a lawsuit against Zynga, saying Zynga’s game “The Ville” infringed the copyright of the EA’s “virtual life social version. Zynga’s lawyer denied the allegation, and asked the federal judge to prohibit EA’s interference in Zynga’s recruitment. Zynga said EA’s copyright litigation was unfounded.
EA released “virtual life social version” in August 2011. Over the past month, the game has brought over $50 million in revenue, with an average daily active users of 300 million.
In addition, Zynga disclosed in an internal memorandum on Tursday that the rumor about the company’s recruitment for Maytal Olsha as new COO was true.
Olsha has started to work in Zynga about a week and a half ago. He is responsible for the day-to-day operations of the company’s regulated markets, such as online gambling business. This is in line with the background of Olsha as he acted as the senior vice president of regulatory market sector of gambling portal 888 Holdings.
ZNGA stock price rose sharply by 7.43%, or $0.22, to $3.18, with 31.37 million shares traded, well above the daily average of 14.81 million shares. ZNGA stock price has recorded a three-straight-day gain since Wednesday.