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Zynga Expects Wider Q2 Loss, To Slash 520 More Jobs (ZNGA)

Social game maker, Zynga Inc. (NASDAQ: ZNGA) announced on Monday that it will slash another 520 jobs or about 18% of its total workforce  as the embattled company looks to cut costs and bring a strategic shift by focusing more on mobile games.

The Company said that by slashing jobs it will be able to save $70 million to $80 million, annually. Nonetheless, the Farm Ville maker is expecting to post wider-than-anticipated loss in the fiscal second quarter as its active users base is contracting sharply while weak bookings are expected to dent future revenue. In the preceding quarter, the San Francisco based company said that active users’ base fell 13%. On Monday, Zynga said that bookings are likely to come in at the lower end of its earlier estimated range between $180 million and $190 million.

Commenting over the cost cutting measures, Zynga Inc’s Chief Executive Mark Pincus said in company’s blog post that the move was “proactive”, aimed at attaining financial strength, adding that some offices will also be shuttered.

“By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences,” wrote Pincus in a blog post.

The Company has been aggressively cutting costs since last year as demand for its social games on Facebook (NASDAQ: FB) platform has declined significantly amid rising competition and proliferation of mobile games—an area where Zynga has struggled to generate revenue.

Zynga, which is scheduled to report fiscal second quarter results in the third week of June, is expecting a loss of $28.5 million or $39 million. Earlier in April the Company projected a loss of $26.5 million or $36.5 million for the fiscal second quarter.

Shares plunged about 12% in regular trading hours on Monday to close at $2.99. Trading was halted twice.


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