Zynga cuts 520 workers and shutters several offices
The embattled social-games maker aims to cut up to $80 million in costs by culling employees across the company and closing offices in New York, Los Angeles, and Dallas.
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Hoping that further cost cuts will right its heeling ship, social-gaming company Zynga said Monday it is cutting 18 percent of its workforce and closing various offices.
Zynga posted the news on its blog. Zynga must shrink before it can grow again, CEO Mark Pincus told workers in his memo, a situation that somehow nobody at the 5-year-old company "ever expected to face."
He also said the Zynga "brothers and sisters" will be getting generous severance packages along with their "painful goodbyes."
AllThingsD reported that Zynga would shutter its offices in New York, Los Angeles, and Dallas.
The layoffs, which number about 520 positions, will be accompanied by other reductions to infrastructure costs.
The San Francisco-based company has been struggling to revive the momentum that propelled it to the forefront of Web-based social games, after newer titles have failed to get the same traction as digital-livestock diversion FarmVille did out of the gate. Mobile is a key component of its turnaround plan, as is expense crimping, which Zynga implemented last year. That has helped it protect profit but hasn't stanched the flow of departing gamers.
The company's stock has been struggling alongside its games since it went public at the end of 2011, when shares closed below its $10 IPO price and have yet to recover. They're currently worth about $3.41 each.
After earlier cost retrenchment in the fall, the more substantial cuts now are not only because mobile growth has failed to ignite as hoped but also because Web-based deterioration is setting in quicker than expected, according the AllThingsD report.