Can These Layoffs and Office Shutdowns Save Zynga?
Zynga Inc. (NASDAQ:ZNGA) reported bad news for its employees Monday. The company is laying off 18 percent of its workforce — subsequently cutting 520 employee jobs in an attempt to reduce company costs and move its core focus toward the mobile space, AllThingsD reported.
The social gaming company is also closing its offices in New York, Los Angeles, and Dallas. This reduction of infrastructure costs, coupled with an $80 million dollar cut in staff costs, is part of an attempt to consolidate and restructure the struggling business which must re-negotiate its focus from web to mobile.
The web business and the surge of social networking is what drove Zynga’s initial success, but the portal’s unanticipated decline is also what hurt the gaming site so drastically. Zynga is still struggling to build up its mobile business sufficiently, but the gaming company hopes this new re-sizing will facilitate greater success.
Zynga has been working to rectify its business strategy ever since its rocky public offering when investors recognized that the success of its online gaming business was likely to be short-lived. Even though the company finds continued support with some of its most lucrative partners, especially Facebook (NASDAQ:FB), it has still been forced to cut many of its most unsuccessful games short.
As Zynga focuses on moving into the mobile space and continues to cut costs, it hopes that its recently solidified management and additional board help will help it revive success in its remaining offices in San Francisco, Beijing, and Bangalore, along with other units across the U.S.
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