Zynga Inc (NASDAQ:ZNGA) is in the process of transition from Facebook Inc (NASDAQ:FB) to mobile, says a report from Sterne Agee by analysts Arvind Bhatia and Brett Strauser. Zynga has some success in mobile, but according to the report it “is difficult to differentiate on mobile” as it can be short lived, as in the case of Draw Something.

Zynga Inc (ZNGA) Earnings Preview

Real money gaming is still a potential opportunity for Zynga, but any significant gains from the segment can’t be expected for at least next 12 months, according to the analysts. The report terms the hiring of CEO Don Mattrick as a “bold” move, which may help the game maker to turn their fortune, but “it is too early to tell.”

Advertisers may leave Zynga for King.com

Zynga Inc (NASDAQ:ZNGA) will come up with its earnings report card today and will hold a conference call at 5:00 PM EST. The report expects bookings of $184 million versus the guidance of $180 million to $190 million, and the consensus estimate of $182 million. Adjusted EBITDA is expected to come in at $0.5 million compared to the consensus of a loss of $3 million.

According to Appdata, Zynga Inc (NASDAQ:ZNGA) has lost its crown as the biggest social gaming company to King.com, which now holds the top spot on Facebook in terms of Monthly Active Users (MAU’s). Zynga losing the top spot reflects the analysis made by Sterne Agee that traffic across Zynga’s core franchises is declining. Also, losing the top spot may also impact Zynga’s advertising revenue as advertising partners may want to partner with the “largest social game company.”

Zynga reduced workforce for three straight quarters

Zynga Inc (NASDAQ:ZNGA) has been cutting costs to improve its financials. Recently, the company laid-off 520 or 18 percent of its global workforce, bringing the total headcount to approximately 2,400 employees. However, report believes that these layoffs may not be enough given the current plight of revenues, and the company may need to slash more staff.

Based on the reduced second quarter guidance, annual billings “run rate” are expected to be $750 million to $800 million. In 2010, Zynga reported $839 million in billings with a year-end headcount of only 1,483, meaning, the game maker generated more billing with almost 40 percent lower headcount. But, in 2010, Zynga was in “strong growth mode” and the future hiring plans were based on such growth. The peak headcount for Zynga Inc (NASDAQ:ZNGA) was in the third quarter of 2012 with 3309 employees. Since then, the company has been reducing the workforce each quarter: 251 in 4Q 12, 156 in 1Q 13 and 520 in 2Q.

StrneeAgee has a ‘Neutral’ rating on Zynga.