San Francisco-Based Zynga to Lay Off 520 Employees

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There's no joy in Farmville today as Zynga, the San Francisco-based online gaming company, has announced "a workforce reduction and closure of various office locations."

Zynga's headquarters (Dan Brekke/KQED)
Zynga's headquarters in San Francisco (Dan Brekke/KQED)

Zynga says it will lay off a total of 18 percent, or 520 employees, just the latest downsizing in a series of them over the last year.

"The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013," the company wrote in a press release.

AllThingsD is reporting Zynga will shutter its offices in New York, L.A., and Dallas.

The company also said it expected to lose more money than was forecast in its previous guidance, and that its bookings would end up in the lower half of estimates.


NASDAQ halted trading on shares at one point before they finished at $2.99, a loss of over 12 percent on the day.A spokesperson told us the company would have no comment beyond its press release and what company founder and CEO Mark Pincus wrote in a  blog post today, which includes this ...

None of us ever expected to face a day like today, especially when so much of our culture has been about growth. 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.

In April, VentureBeat reported that Zynga was "no longer the largest gaming company," having ceded that title to London-based King. (Forbes told the story of that rise in March.)

Zynga went public in late 2011 amid a mini-resurgence in the tech IPO market. But the initial offering landed with a thud. The stock hit a high of almost $16 in Mar 2012; it's now trading at about $3.

Zyngas's fortunes have often seemed closely tied with those of Facebook, where its games have been tightly integrated. As the Wall Street Journal reported in March ...

Founded in 2007, the game maker grew rapidly by leveraging Facebook’s social network, taking advantage of its structure and its sharing tools to encourage players to connect with their friends. In 2011, the company made up about 12% of Facebook’s revenue.

However, the relationship, at times, has been strained. And, in more recent quarters, Facebook and Zynga have drifted further apart, with Zynga opening its own portal and investing more in its mobile applications and Facebook promoting the games of other developers. Nevertheless, Zynga still makes the bulk of its money from Facebook. The social network accounted for 79% of Zynga’s bookings in the fourth quarter.

In April the company entered the online gambling space in the U.K. It has also applied for a license with the Nevada Gaming Control Board and hired lobbyists to push for online gambling. Sam Harnett reported on this new initiative for KQED in January.

"Making the transition to real money gambling for Zynga won’t be as simple as pulling a lever," Harnett wrote.

"Organizationally they aren't prepared for it,” Kevin Flood, an online gambling consultant, told Harnett.

Presumably we'll get an initial indication of whether this is true or not in July, when the company releases its next earnings report.