Zynga Inc (NASDAQ:ZNGA) is planning to lay off 18 percent of its staff (or 520 people) as it continues efforts to cut costs and restructure itself, according to a press release on the company’s site. All Things D’s Kara Swisher was the first to report on the job cuts.
Swisher reported that included in those job cuts is the closure of its New York, Dallas and Los Angeles offices. Zynga’s press release came out not long after her report, and the company requested that trading of its stock be halted right before the news was officially announced.
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Zynga Moves To Cut Costs
Zynga Inc (NASDAQ:ZNGA) has gradually been laying off workers since last year. It slashed 100 positions in October and then laid off U.S. moderators in a further round of cuts in December. The online gaming company said these new cuts will save it between $70 million and $80 million. It also said that the cuts will be mostly completed by August of this year. They are expected to cover all functions of the company.
The company said it will record an estimated $15 million reversal of stock-based expense in the second quarter of this year as a result of the job cuts. Zynga Inc (NASDAQ:ZNGA) updated its outlook for the second quarter of this year based on the cuts, moving its net losses to between $39 million and $28.5 million. The company also said it expects bookings to be in the lower half of the outlook range it provided in its first quarter earnings release.
Zynga’s Reasoning Behind The Cuts
According to Swisher, the reason Zynga Inc (NASDAQ:ZNGA) is digging deeper and making even more cuts is because its Web business is falling even more than expected while its mobile business grows more slowly than expected. The company must now focus on mobile, especially as it no longer has the favorable relationship it had previously with Facebook Inc (NASDAQ:FB). Earlier this year. Zynga Inc (NASDAQ:ZNGA) took steps to distance itself from the social network.