But they bounced back 4.5% to $2.30 in after-hours trade, following news of the cost-cutting initiatives. Rumors of the layoffs in Austin and Boston had spread on gaming blogs and over social networks during the day, and the company’s shares closed down more than 5%, at $2.20. He also said the company was “proposing" to close its Japanese and British offices. At the time, Pincus said the company would examine how to proceed with cuts.Īs the first step of Zynga’s reduction plan unfolded Tuesday, Pincus said that Zynga would significantly pull back its investment in “The Ville" game - a major recent initiative - and scale back on its Austin, Texas studio as it sought to cut costs. Tuesday’s cuts were presaged on 4 October, when Zynga slashed its 2012 outlook and warned investors that it would record a steep drop in sequential quarterly revenues for the first time since its December initial public offering. The memo came on the eve of Zynga’s earnings report on Wednesday, when Pincus and chief financial officer David Wehner are expected to provide Wall Street with more comprehensive details about the company’s overhaul strategy. In March, Pincus made a gamble to acquire game studio OMGPOP for $180 million before acknowledging this month that the deal didn’t pan out, leading to a $90 million writedown. Pincus said the cuts would accompany a regime of “more stringent budget and resource allocation around new games and partner projects," hinting at a fundamental change for a company that was known for expanding aggressively through hires and acquisition deals before it went public to fanfare last December.
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