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TheStreet Open House

This Is Zynga's Turning Point

NEW YORK ( TheStreet) -- Several key hands will not be attending Zynga's (ZNGA - Get Report) all-hands meeting on Wednesday. Don Mattrick, Zynga's new CEO is demonstrating he's highly capable of making swift and significant decisions.

The officers reportedly leaving the doghouse include chief operating officer David Ko, chief technology officer Cadir Lee, senior vice president of games Todd Arnold, and chief people officer Colleen McCreary. The shakeup is part of Mattrick's streamlining of the management structure to eliminate layers of decision makers.

Former CEO and Zynga founder Mark Pincus keeps his job as the chief product officer. Pincus also happens to own a majority of voting shares. Layoffs aren't new at the struggling gamemaker, and the C-suite shuffle comes on the heels of shutting down OMGPOP.

Zynga is holding onto Draw Something, the motivating reason for buying OMGPOP; however, Zynga decided it was more advantageous to dig a hole in the backyard and bury the rest of OMGPOP than sell the remaining assets to former employees.

I hope Mattrick's decision is based on using the assets in a future project and not compounding the original purchase mistake by leaving what little value remains sitting on the table. There could be a valid reason why Mattrick didn't want to let go of intellectual property rights if Zynga is setting up for a "strategic alternative," a.k.a. a buyout.

Zynga may believe the assets are worth more to a bigger company looking to take over Zynga than the few pennies on the dollar they might fetch now. About a month ago Zynga hired Mattrick, and his compensation structure certainly suggests finding a buyer is near the top of his goal list.

It's the reason I bought shares in Zynga. For those following at home, I have been highly critical of Zynga's financial vulnerability from its reliance on Facebook (FB - Get Report).

By structuring Mattrick's pay in order to reward a fast sale, Zynga kills two birds with one stone. First and maybe most beneficial, it provides the white dog with more than a cute face to negotiate with. Facebook can't ignore the real possibility that a significant revenue source isn't fully leashed and could run away.

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