Zynga Founder Pincus to Cut 18% of Jobs After Return as CEO

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Zynga CEO Mark Pincus

Photographer: David Paul Morris/Bloomberg

Zynga Inc. founder Mark Pincus is cutting 18 percent of the casual-games company’s work force, less than a month after retaking the reins as chief executive officer.

The firings, amounting to 364 jobs, are part of a cost-reduction plan that will save $100 million annually, the company said Wednesday in a statement. Pincus, who replaced CEO Don Mattrick on April 8, is also cutting back on outside services and reducing central functions as he works to develop hit titles for mobile devices, he said in an interview.

“We have urgency to focus the execution of the company,” Pincus said. “We’re just at the beginning of launching the most exciting mobile slate in our history.”

The job cuts will mostly affect corporate and central-services roles, Pincus said. The company, known for FarmVille and Words With Friends, is exiting sports and focusing on mobile games that fit into five categories, including casino and racing. The company’s first mobile action-strategy release, Empires & Allies, went live on Tuesday.

Zynga advanced 5.4 percent to $2.74 in extended trading. The shares rose 4.4 percent to $2.61 Wednesday in New York before the job cuts were announced. The stock is down 1.9 percent this year.

The company ended development of two sports titles, NFL Showdown and Tiger Woods Golf, being worked on under Mattrick. Zynga will make six to eight games this year, Pincus said on a conference call with investors.

The job reductions, including the closing of a studio in Orlando, were announced with first-quarter results. Zynga showed growth in mobile games, where the company has lagged behind competitors. Mobile bookings rose 84 percent from a year earlier, and accounted for 63 percent of total business, the company said.

The loss was 1 cent a share, excluding some items, narrower than analysts’ projections for a loss of 2 cents, the average of estimates compiled by Bloomberg. Bookings totaled $167.4 million, versus the average estimate for $163.4 million.

Bookings at Zynga are based on purchases made during the period, while the company’s official sales include revenue deferred from earlier periods.

For the current second quarter, Zynga projects a range of $145 million to $160 million in bookings, below the $161.8 million estimate, and an adjusted loss of 2 cents a share, which matches analysts’ views.

Zynga, once the leader in social games played on Facebook, has struggled to make the transition to mobile phones.

Mattrick, a former Microsoft Corp. executive, joined the company as CEO in July 2013. Since Pincus’s return, senior Zynga executives including Chief Operating Officer Clive Downie have left. Pincus brought back a former lieutenant, Marcus Segal, as senior vice president of operations.