Zynga Has Been a Losing Game for Investors
As tech titan Apple (AAPL) was unveiling its new iPad in San Jose, Calif., on Tuesday, employees of another, very different, tech company were receiving pink slips. Zynga (ZNGA) yesterday cut 5% of its workforce — or 150 people — in a move that was hardly surprising for the beleaguered social-gaming company, especially following the slashing of its 2012 outlook earlier this month.
The cuts came ahead of Zynga’s third-quarter earnings release, which is scheduled for after the bell Wednesday.
The San Francisco-based company will also be putting 13 older games to rest and will pull back on its investment in its latest game The Ville. It also shut its Boston office and may be looking toward shuttering its operations in Japan and the U.K. (the company outright owns its San Francisco headquarters, having purchased the building for $220 million earlier this year). This speaks to a much different strategy for Zynga than what it came out of the gate with — expansion, acquisition, spending. But its failed OMGPop buy, which led to an approximately $90 million writedown that killed almost half the deal’s value, certainly helps point to the need for a new plan.