Struggling social games maker Zynga on Monday said it plans to cut about 520 jobs, or 18% of its workforce and close some offices to reduce costs amid disappointing sales of newer titles. The restructuring will save an estimated $70 million to $80 million in pretax expenses. The cutbacks to be completed by August will result in restructuring charges of $24 million to $26 million in the second quarter and $2 million to $5 million in the third quarter.
As a result of the layoffs and office closures, Zynga projects a second quarter net loss of between $39 million and $28.5 million. It previously had forecast a net loss of $36.5 million to $26.5 million. “While our Farmville franchise continues to perform well, other games are underperforming,” the company stated in its announcement.
Zynga CEO Mark Pincus also acknowledged the difficulty in transitioning its business to the mobile sphere. “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,” he wrote in a blog post today.
Zynga in October laid off 150 workers, phased out 13 games, and closed its Boston office in a previous effort to cut costs.