Zynga is saying goodbye to 18% of their employees

With generous severance packages Zynga is saying goodbye to 18% of their employees.

Zynga as a leading provider of social game services, today announced substantial cost reductions, including a workforce reduction and closure of various office locations.  Zynga expects to complete a reduction in force of approximately 520 employees or approximately 18% of its global workforce.  The workforce reduction is expected to be substantially complete by August 2013.

In their  updated outlook for the second quarter of 2013. beside projected net loss stands that only Franchise which continues to perform well is FarmVille, other games are under performing. 

Will this results with lot of games closures?

Zynga Announces Substantial Cost Reductions Updates Outlook SAN FRANCISCO, June 3, 2013 (GLOBE NEWSWIRE) -- Zynga Inc. (Nasdaq:ZNGA), a leading provider of social game services, today announced substantial cost reductions, including a workforce reduction and closure of various office locations that will result in an estimated $70 million to $80 millionin pre-tax annualized cash expense savings. As part of these initiatives, Zynga expects to complete a reduction in force of approximately 520 employees or approximately 18% of its global workforce. The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013. Zynga will record pre-tax restructuring charges of approximately $24 million to $26 million in the second quarter, and $2 million to $5 million in the third quarter. Zynga also expects to record an estimated $15 million reversal of stock-based expense in the second quarter of 2013 as a result of the net impact of these workforce reductions. Outlook Zynga's updated outlook for the second quarter of 2013 is as follows: Net loss is projected to be in the range of $39 million to $28.5 million, which is updated to reflect the impact of the actions noted above.   Bookings are projected to be in the lower half of the outlook range provided in our April 24, 2013 first quarter earnings release. While our FarmvilleFranchise continues to perform well, other games are underperforming.   Zynga re-affirms the second quarter 2013 outlook provided on April 24, 2013 for Revenue, EPS, Adjusted EBITDA and Non-GAAP EPS. Zynga also re-affirms the full year 2013 outlook provided on April 24, 2013 for Adjusted EBITDA margin. Non-GAAP Financial Measures A discussion of non-GAAP financial measures and reconciliations of second quarter 2013 outlook non-GAAP financial measures to the most directly comparable GAAP measures are provided in our April 24, 2013 first quarter earnings release. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with generally accepted accounting principles ("GAAP"). And let us see what Marc Pincus says to Zynga Community: CEO Update by Zynga on June 3, 2013 Our Founder and CEO Mark Pincus today sent a note to employees outlining structural changes Zynga implemented today and provided some detail on cost-reductions that are taking place company-wide. Please find his note, posted in its entirety, below. *********************************************** To our Zynga Community, Today is a hard day for Zynga and an emotional one for every employee of our company.  We are saying painful goodbyes to about 18% of our Zynga brothers and sisters.  The impact of these layoffs will be felt across every group in the company. 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. These moves, while hard to face today, represent a proactive commitment to our mission of connecting the world through games.  Mobile and touch screens are revolutionizing gaming.  Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect.  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. Because we’re making these moves proactively and from a position of financial strength, we can take care of laid off employees.  We’re offering generous severance packages that reflect our appreciation for all of their work and we hope this will provide a foundation as they pursue their next professional steps. Although these are hard decisions, I’m confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term. I’m encouraged by our recent progress.  Running With Friends is a great example of the quality player experience we can deliver, already receiving an average 4.5 app star rating from 22,700 players in less than one month after launching. Our FarmVille franchise teams continue to innovate and deliver ground breaking new social experiences like County Fair which, despite only being available on the web, is engaging 39 million monthly players. I want to thank every one of you for the spirit, creativity and energy that you’ve invested in Zynga.  You’ve reintroduced a generation of people to gaming and through these games offered them new ways to connect with their families, make new friends and even sometimes find love. Everyone will be affected by these changes and I’m sure there will be many follow up questions to this email.  If you have specific questions relating to your project or team, please talk to your manager.  For any other feedback or thoughts feel free to email me directly. Mark