US social game developer Zynga Inc. (NASDAQ: ZNGA) will cut 520 jobs globally before this August.
It said on June 4 that it would lay off about 520 staff globally before August this year and the staff accounted for about 18 percent of the total. Mark Pincus, CEO of it, stressed that the layoff would help it reduce cost by about USD 80 million. Hurt by this, it dropped 12.03 percent to close at USD 2.99 on the Nasdaq on the day, compared to the IPO price of USD 10.
According to financial results it released for the first quarter of this year, the aggregate operating revenue reached USD 263.5 million and the net profit hit USD 4.1 million, better than previous market expectations. However, the diluted earnings per share was about zero. Hurt by this, it saw share price fall 11 percent on the day it unveiled the quarterly results.
The CEO said in a letter to staff that it had a sharp edge in staff size in the past and the edge helped it establish a leading position in the field of social games once. However, the edge could be neglected under a mobile- and multi-platform strategy and just because of this, it failed to win a success under the strategy.
People close to it disclosed in an interview that 30 of its staff in the Chinese mainland would be laid off this time and after that, it would see staff size there drop to 130 from previously 160. This would be the first time for it to cut jobs in the market and in addition, it would shut down representative offices in cities including New York and Los Angeles. Omgpop, a part of it, would be shut down this time. Omgpop was acquired by it for USD 180 million in March 2012 and shot to fame through launching Drew Something. Its market cap is about USD 2.09 billion currently, compared to a record high of USD 11.5 billion.
An industry observer pointed out that it depended much on social network sites including Facebook and owning to this, it established a leading position in the field of social games in the PC era and ranked No.1 among game developers on the platform in terms of revenue once. However, it experienced a list of recessions from the start of last year and the edge that helped it much in the past had become a big obstacle on its expansion way. It had no other choice but to shift itself and in the process, it would meet difficulties undoubtedly.
