NEW YORK (TheStreet) -- To save on costs and attempt to right size the company, Zynga (ZNGA) is laying off 18% of its staff, or 520 employees, which means closing its New York, L.A. and Dallas offices.
Shares, which were briefly halted Monday afternoon, plunged 12% to close at $3.
One of Zynga's designers tweeted that Zynga LA is being shutdown with about 55 people being fired. Zynga is doing the layoffs in order to save as much as $80 million in costs.
"The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013," the company noted in a press release. Zynga said it will take a pre-tax charge of $24 to $26 million in the second-quarter, and $2 million to $5 million in the third quarter.The San Francisco-based Zynga has had a rough go of it in recent months, struggling to earn a profit on the shift from desktop to mobile. In its first-quarter earnings report, Zynga said "2013 will continue to be a transition year as we face the challenging environment on the web and invest in developing the leading franchises and network across web and mobile platforms..." Zynga updated its outlook for the second quarter. It expects its net loss to fall between $28.5 million and $39 million with bookings projected to be "in the lower half of the outlook range provided in our April 24, 2013 first quarter earnings release." Zynga re-affirmed the second quarter 2013 outlook provided on April 24, 2013 for Revenue, EPS, Adjusted EBITDA and Non-GAAP EPS and its full-year outlook. For the second-quarter, Zynga expects to lose 3 to 4 cents per share on $225 million to $235 million in revenue. Analysts polled by Thomson Reuters expect Zynga to earn 1 cent per share on $229.8 million in revenue. Zynga has had a rough time retaining executives as many have left for companies with brighter futures. In late November 2012, former CFO, Dave Wehner departed for Facebook (FB). The company has also lost Mike Verdu, Jeff Karp and Mike Gupta, among others. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV