Zynga, the biggest maker of online social games, says it will cut 520 jobs, or 18 per cent of its staff, and close some offices amid disappointing results from its titles outside the Farmville series.
The reductions will save an estimated $70 million to $80 million in pretax expenses annually, the San Francisco- based company said in a statement after markets closed.
Zynga did not say which offices were closing although staff indicated that those in Los Angeles, New York and Dallas could be affected.
The company, which established a customer service operation in Ireland in 2010 employing 50 people, had announced plans in 2011 to increase those numbers though no figures were made public.
There was no mention in yesterday’s announcement of the Irish operation.
The cuts will be completed by August and will result in restructuring charges of $24 million to $26 million in the second quarter and $2 million to $5 million in the third quarter.
Zynga will also record about a $15 million reversal of stock-based expenses because of the job reduction. It said the net loss in the current period would be $28.5 million to $39 million, including the costs of the restructuring.
"While our Farmville franchise continues to perform well, other games are underperforming," the company said in the statement.
"None of us ever expected to face a day like today, especially when so much of our culture has been about growth," chief executive Mark Pincus said in a memo to employees. – (Bloomberg/Reuters)
