As Zynga’s Outlook Plummets, CEO Pincus Hints at Cuts

Published on October 4, 2012
by Mike Isaac

It’s not news that Zynga hasn’t fared well on the open market this year. The company’s stock has fallen into the low single-digit numbers, hitting an all-time low recently at $2.66. It seemed like things couldn’t get any worse for the social gaming company.

But it can, and did, on Thursday afternoon. The company lowered its revenue projections for the remainder of the fiscal year, slashing around $100 million from their estimated bookings of $1.15 billion to $1.23 billion, now lowered to $1.09 billion to $1.1 billion.

Mark Pincus, however, doesn’t want his employees freaking out (at least, not more than they already are). The CEO sent out a conciliatory yet upbeat letter to his troops, rallying them not to lose hope.

But there’s a line in the memo that could give some cause for concern. “We’re addressing these near-term challenges by targeted cost reductions and focusing our new game pipeline to reflect our strategic priorities,” Pincus wrote in the company-wide memo.

Translation: Expect some cuts in the weak-performers’ department.

That could mean taking resources away from some of the Ville-style games that were once its most popular. That includes one of the company’s recent titles, The Ville, the underperformance of which was first chalked up to being launched late in Zynga’s last earnings quarter.

It could also mean cutting a number of employees entirely.

Zynga declined to comment beyond its company blog post or wire press release.

Instead, the company will continue to focus on it’s tried-and-true core strengths. “We’re further investing in other genres like casino where we already lead with Zynga Poker,” Pincus wrote. That’s an old-hat stance, repeated from the previous quarter. They’ve also expressed interest in re-upping talent in mid-core games like Mafia Wars, a category that the company calls “blue PVP.”

In other words, more wood behind fewer arrows.

The constant barrage of bad press and depressed outlooks for the company has to be crushing for its employees — especially early ones — whose stock options are now worth far less than ever before.

And speaking of stock, ZNGA hit yet another all-time low in after-hours trading on Thursday, sinking to $2.29 per share at a sharp 18.35 percent drop.

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