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This article was published on June 3, 2013

Zynga’s stock halted as the company confirms an 18% reduction in its workforce

Zynga’s stock halted as the company confirms an 18% reduction in its workforce
Alex Wilhelm
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Alex Wilhelm

Alex Wilhelm is a San Francisco-based writer. You can find Alex on Twitter, and on Facebook. You can reach Alex via email at [email protected] Alex Wilhelm is a San Francisco-based writer. You can find Alex on Twitter, and on Facebook. You can reach Alex via email at [email protected]

If the ascent is dizzying, the downward slope can be utterly dispiriting. The once high-flying and high-profile gaming company Zynga today confirmed that it intends to reduce its workforce by 18 percent. Its stock was halted, with a final trading price of $3.41 before the freeze.

Zynga once traded north of $14. A litany of problems, including a massive write-down following its purchase of rival company OMGPOP and declining interest in its games have led to Zynga consistently disappointing investors with lackluster revenue and often missed profits.

The company called the decision”necessary to move forward.” Zynga is not only losing staff through position eliminations, but also through open defections; a company whose stock declines as heavily as Zynga’s typically suffers from internal discontent as nest eggs rapidly evaporate. Zynga promises that it is providing “generous severance packages” for fired workers.

The news in the media is that the firings will save the company between $70 and $80 million per year. The 18 percent reduction should represent around 520 employees exiting the firm.

What follows is Zynga’s CEO Mark Pincus’ note sent to his employees today:

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.

Top Image Credit: Sabrina Dent