TMCnet Feature
June 04, 2013

Zynga Lowers Q2 Financial Forecast, Announces More Job Cuts

By Rory Lidstone, TMCnet Contributing Writer

Zynga (News - Alert) seems to be caught in a particularly vicious cycle. Last year, the company best known for the online game Farmville was forced to cut its financial forecast not only for the third quarter of the year, but for the entirety of 2012. This led to job cuts in October equaling about 5 percent of its staff at the time.

Now, according to BBC News Business, Zynga has released an adjusted forecast for the April to June quarter of 2013, saying it expects a loss of $28.5 to $39 million, compared to projections between $26.5 and $36.5 million earlier this year. Once again, the company's response is to cut jobs — 520, to be exact — equal to about 18 percent of its workforce.

Zynga has been experiencing trouble since its initial public offering toward the end of 2011. Around that time, Facebook (News - Alert) changed its rules toward social games like those Zynga produces, forcing the company to seek revenue sources outside of the social network.

The company has spent most of 2013 so far trying to increase revenue and operating efficiency. For example, in March, Zynga announced plans to shut down its studio in Baltimore, while also consolidating its locations in three other cities. These consolidations included two Austin studios merging into one, two locations in New York City being integrated and a studio in McKinney, Texas, being absorbed by Zynga's Dallas location.

This restructuring will apparently help the company save between $70 and $80 million in annual costs.

"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,'' wrote Mark Pincus, chief executive of Zynga, in a blog post.

Later in March, the company re-launched its website, allowing users to play its games without having to sign into Facebook. This was arguably the biggest step Zynga has taken toward Facebook independence yet.

Unfortunately, it seems these moves have not helped the company's financial fortunes, at least in the short term.

Edited by Alisen Downey
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