Zynga cuts 18 percent of staff, closes offices

Zynga is laying off hundreds of workers and closing offices as part of a restructuring, the company announced on Monday.

The social gaming company is laying off 520 employees, or about 18 percent of its workforce. It also said that it is closing multiple offices, but declined to state which ones.

But earlier on Monday, AllThingsD, citing anonymous “sources close to the situation,” reported that the company is closing offices in New York, Los Angeles and Dallas. Meanwhile, a Zynga designer in the L.A. office, posted on Twitter that some 55 people are being laid off as a result of the closure of that location.

Zynga said that the restructuring would save the company between $70 million and $80 million before taxes each year.

The job cuts are at least the second round of mass layoffs in less than a year for the struggling company. Last fall, the company cut about 5 percent of its workforce. It also reportedly shuttered four offices earlier this year, including one in Baltimore.

The San Francisco company has seen its business sputter over the last year. Last year, its profit declined as its sales growth slowed over the previous year. In the first quarter of this year, sales actually fell from the same period a year earlier.

As Zynga has struggled, it has also seen the departure of numerous executives.

Update: Zynga spokeswoman Michelle Kramer declined to confirm the specific office closures.

Update 2: In a blog post on Monday, Zynga CEO and founder Mark Pincus called the move “painful” and a “hard day” for the company. But he said it was a necessary one to refocus the company on its mobile efforts.

“None of us ever expected to face a day like today, especially when so much of our culture has been about growth,” Pincus said in the post. “But I think we all know this is necessary to move forward. 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.”

Pincus added that the money saved through the layoffs would “offer our teams the runway they need to take risks and develop … breakthrough new social experiences.”

Photo courtesy of Associated Press.

 

 

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