When Zynga (NASDAQ:ZNGA) announced an earnings warning in early October, CEO Mark Pincus said cost-cutting would be a priority. So yesterday, he set forth the first move: He has cut about 5% of the workforce, which comes to 142 people.
This will mean the closure of Zynga’s Boston office as well as the possible shutdown of the operations in Japan and the U.K. Staff will also be reduced in the Austin location.
At the same time, Zynga will cut back on data-hosting, marketing and contractors. The company will also sunset 13 games (specific titles weren’t mentioned).
Unfortunately, Zynga has had a tough time creating hit games and has not been able to make the transition to mobile. For example, its $180 million acquisition for OMGPop, which is the developer of Draw Something, has been a disaster.
In fact, on Facebook’s (NASDAQ:FB) earnings call yesterday, Mark Zuckerberg noted the travails at Zynga. He said its rivals, like Kixeye and Wooga, have been gaining market share.
After the market closes today, Zynga plans to announced its earnings. The company expects to generate revenues of $300 million to $305 million and post a loss of 1 cent a share.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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