Zynga BloodBath: What Wall Street Is Saying

NEW YORK ( TheStreet) -- Social gaming company Zynga ( ZNGA) let go 18% of its staff Monday, as the company tries to become profitable.

"The work force 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 pretax charge of $24 million to $26 million in the second quarter, and $2 million to $5 million in the third quarter.

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 reaffirmed the second-quarter outlook provided on April 24, for revenue, EPS, adjusted EBITDA and non-GAAP EPS and its full-year outlook.

Here is what Wall Street is saying about Zynga's job cuts:

Jefferies Entertainment Team (Hold, $3 price target)

"ZNGA continues to reduce costs with layoffs that will save $70-80MM, but we think it will take a hit game to get the stock working. Hit mobile games can be very profitable, but the company has struggled here. For 2Q, mgmt now expects bookings at the lower end of previously issued guidance, while re-affirming outlook for revenue, EPS, Adj. EBITDA, and Op EPS."

UBS analyst Eric Sheridan (Neutral, $3.30 PT)

"In lowering its Q2 bookings guidance, Zynga cited weakness in "other games" but highlighted a strong Farmville franchise. While we had viewed Zynga Q2 bookings guidance as conservative, it now appears a combination of new game launches and older titles have seen a dip in performance. As a result, we are taking a more cautious approach to growth in Zynga's core bookings in future periods."

Shares of Zynga were lower in premarket trading Monday, off 0.33% to $2.98.

-- Written by Chris Ciaccia in New York

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