This is a good question.

There is somethin like $600MM of ST liabilities, though vs $1.2B of cash & equivalents (/securities).

Not sure what that is, but that is (potentially) a big deal.

Although it seems to be on the BS QoQ

http://www.google.com/finance?q=NASDAQ:ZNGA&fstype=ii

LT Debt = $100MM, so not as significant an issue.

Those $600MM are detailed in their Quarterly report:

-$450MM are deferred revenues (i.e., people bought things in their games but they don't recognize everything as revenue right away, a common procedure with online video games).

-$40MM are customer deposits, which according to them "represent amounts received for unredeemed game cards as well as advanced payments from various customers."

-$120MM are things like transaction taxes, compensation related liabilities and accounts payable.

So, it's not really debt, just working capital.

- Interesting note.

To the tune of $450, though, these constant amount in deferred revs is reasonably large source of working capital/liquidity @ ~5x their bank line. But valuation of the type implied in the headline should (most likely) be done on some concept of net cash, I would think. It cost you money to liquidate the assets before you get your hands on the cash.

Gross margin less SGA is only 30% of revenues, so maybe only $300mm-ish needs to be shaved off the cash balance from deferred revs. These liabilities must be incurred to realize the future revenues wigthout refunding back the pre-pays, good 1st approximation.

So, $1.0 to 1.1B is closer to the floor value. They are at $1.9B market cap a5 $2.50, so almost 2.0x coverage of this right now. (options, etc might swing this a bit).

I expect investors are expecting lawsuits or other losses in the near term that could easily reduce their assets.