Zynga Lays Of 18% of Staff

Posted by at 10:48 am on June 26, 2013

zynga_logo_7Zynga is making significant cuts to it’s workforce. The online game maker, which has struggled to build its mobile business while stemming a decline of its desktop games, said Monday it plans to dismiss about 18% of its staff, or 520 people.

The cuts underscore deepening worries for Zynga, once seen as a pioneer in a wave of companies built on social technologies. The layoffs should save Zynga about $70 to $80 million per year, the company said. These cuts will trim the company to staffing levels of around 2,300, lower than the roughly 2,700 it had at the time of its initial public offering in December 2011.

On Monday, Zynga sent out email notifications to all the employees who will be let go. The cuts will be across the board—including in the San Francisco headquarters—spanning departments as well as both junior and senior employees. It is closing New York, Los Angeles and Dallas offices, people briefed on the matter said.

“The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played,” said CEO Mark Pincus in an internal email and blog post. On Monday, shares of Zynga fell 12% to $2.99, about 70% below the company’s IPO price.

Founded in 2007, Zynga swelled swiftly, hiring game designers at a rapid clip from rivals like Electronic Arts Inc. EA -0.14% and gobbling up startups, such as OMGPOP, the maker of “Draw Something”, a Pictionary-like mobile game. As Zynga expanded, it also spent heavily on real estate, paying $234 million in early 2012 to buy its giant headquarters in San Francisco.

Since the IPO, Zynga has struggled to revive its business, which was caught flat footed by the meteoric rise of mobile devices.

On Monday, Zynga sent out email notifications to all the employees who will be let go. The cuts will be across the board—including in the San Francisco headquarters—spanning departments as well as both junior and senior employees. It is closing New York, Los Angeles and Dallas offices, people briefed on the matter said.

This isn’t Zynga’s first round of layoffs, but it is the largest. Last fall, it cut 5% of its workforce and closed multiple games.

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