News Column

Zynga Closes Boston Office, Japanese and UK Operations

Oct. 24, 2012

Ira Kantor

San Francisco-based social game developer Zynga has shut down its Boston studio and plans to close its Japan and United Kingdom offices while reducing its staff in Austin, Texas, company CEO Mark Pincus said today.

"All of these represent terrific entrepreneurial teams, which makes this decision so difficult," Pincus said in a letter sent to employees today. "In addition to these studios, we are also making a small number of partner team reductions."

Pincus added the company will lay off nearly 5 percent of its full-time workforce. The cuts stem from an overall cost reduction plan that "also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors."

The moves come one day before the company announces its full financial results for the third quarter.

"These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile," Pincus said.

A source familiar with the situation said hundreds of employees have been laid off in Boston, Austin and an undisclosed third location -- reportedly the game maker's Chicago office.

The source added the company is trying to reduce its headcount without trimming its staff in San Francisco.

"It's a cost-cutting measure," the source told the Herald. "It was all very sudden."

The company, known for such games as Words With Friends, FarmVille and Zynga Poker that can be played on Google and Facebook, as well as on multiple mobile phone platforms, saw its stock fall to $2.20 by the close of the market, a 5 percent drop from yesterday's closing price of $2.32 a share.

It remains unclear if other Zynga offices will be hit.

Fareed Mosavat, the current general manager of Zynga Boston, said on his Twitter page today, "The outpouring of support for us has been incredible. Love this Boston scene."

Mosavat did not immediately return messages seeking comment. Other companies, including LuckyLabs and Tapjoy, took to Twitter to offer hiring opportunities for employees.

Pincus said the company is "sunsetting" 13 older games and significantly reducing its investment in The Ville, which the company's Austin office was working on. That game will now be moved to the company's India office, the source said

The Zynga Boston team was currently helping San Francisco colleagues with development of FarmVille 2, which is permanently run out of the Bay Area, the source said. The Boston office was also working on an unannounced game that was set to launch in a couple of weeks but now will not, the source said, adding he wasn't sure whether the company news was supposed to coincide with Apple's iPad Mini launch today.

Earlier this month, Zynga announced preliminary financial results for its third quarter. The company said it expected to report a net loss of between $90 million and $105 million, primarily reflecting weakness of certain games in the company's web "invest and express" category.

Zynga also said its bookings were projected to be in the range of $1.085 billion to $1.1 billion, and that its adjusted earnings before interest, taxes, depreciation and amortization were projected to be in the range of $147 million to $162 million, compared to previous expectations of between $180 million to $250 million.

Source: (c) 2012 the Boston Herald. Distributed by MCT Information Services

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