Zynga slashes workforce, shares fall

by CXOtoday News Desk    Jun 04, 2013

Zynga

 Zynga has announced their decision to cut down their workforce by a fifth, which accounts for about 18 percent of its workforce. The announcement comes after come after the company shed 5 percent of its staff in October, 2012.

Zynga is one of the pioneers of social gaming but has struggled to replicate the success of its Farmville series. It said it now expects to make a loss of between $28.5 million to $39 million (£18.6m to £25m) in the April to June quarter, which is worse than the projection of a loss of between $26.5m and $36.5m the company had issued earlier this year.

“By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences.
-Mark Pincus, CEO, Zynga

Zynga said that the latest move, which also includes shutting some offices, would help it save between $70m to $80m in annual costs. Zynga’s shares slid as much as 15 percent in frantic trade before closing down 12 percent at $2.99 after a four-month low.

However, some analysts said that cutting costs was not enough to boost investor confidence and the company needed to find a way to increase revenues. “You can’t save your way to prosperity,” Michael Pachter, an analyst with Wedbush Securities told Techcrunch.com. “The market is telling you that it’s not confident that revenues are going to grow.”