Zynga Goes Into Restructuring Mode

A 5% workforce reduction, and more cutbacks, are coming

   

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.

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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.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/zynga-goes-into-restructuring-mode/.

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