Zynga to Cut Workforce by a Fifth, in Bid to Restructure Business

Mark Pincus, chief executive officer and founder of Zynga
Getty ImagesMark Pincus, chief executive officer and founder of Zynga.
Update: Zynga has confirmed the layoffs via press release, as well as the numbers (520 layoffs or 18 percent of the workforce) reported by AllThingsD.

The company says this was result in $70 million to $80 million in annualized pre-tax savings. Despite those savings, its guidance for its second quarter earnings is a loss between $39 million and $28.5 million.

In a note to employees, CEO Mark Pincus described this as a "proactive" move that will "offer our teams the runway they need to take risks and develop these breakthrough new social experiences" on mobile and touchscreen devices.

My original post, which went up before the company confirmed the news, follows.

It looks like Zynga is in the midst of laying off one-fifth of its workforce.

At the end of last week, we heard that the company would be laying off 20 percent of its worldwide staff today, and that a number of Zynga's global offices would be affected. A Zynga spokesperson declined to comment, but we've seen the first public sign that the layoffs are underway: A Zynga UI designer just tweeted that Zynga L.A. will be closing, with about 55 employees let go.

This isn't the first time Zynga has had significant cuts. Last fall, CEO Mark Pincus said the company would be reducing costs, and it subsequently laid off 5 percent of its staff. The company has also eliminated some of its less successful titles (and even some unreleased ones), though executives have also said that the number of new game launches should pick up again later this year.

As of its last quarter, Zynga had 2,902 full-time employees. That's probably slightly off by now, but if the 20 percent number that we've been hearing is accurate, then around 580 employees will be affected.

Zynga's revenue and usage statistics continued to decline in its most recent earnings report, with Pincus describing this as a "transition year" as the company shifts its focus to mobile.

The 8 Retailers That Will Close the Most Stores in 2013
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Zynga to Cut Workforce by a Fifth, in Bid to Restructure Business

Forecast store closings: 200 to 250
Number of U.S. stores:1,056
One-year stock performance: -36.8%

The holiday season was rough for Best Buy  (BBY). Same-store sales declined by 1.4% year-over-year, with international stores posting a 6.4% decline while U.S. same-store sales were flat. Company-wide, the electronics retailer reported that holiday revenue had declined to $12.8 billion from $12.9 billion the year before. In the most recent completed quarter, during which same-store sales declined 4.3%, the company reported a loss of 4 cents per share.

Best Buy has been plagued by the trend of  "showrooming" -- customers using stores to get real-world looks at products, then purchasing them online. Speculation persists that former chairman and founder Richard Schulze may buy the company and take it private.

By 24/7 Wall St.

Forecast store closings: Kmart 175 to 225, Sears 100 to 125
Number of U.S. stores: 2,118
One-year stock performance: 8.8%

Both Sears and Kmart have been going down the tubes for a long time, steadily losing their middle-income shoppers to retailers such as Walmart (WMT) and Target (TGT). Sears Holding's (SHLD) same-store sales have declined for six years. In the most recent year, same-store sales at the namesake franchise fell by 1.6% and at Kmart by 3.7%.

The company is already in the process of downsizing its brick-and-mortar presence. In 2012, Sears announced it was shutting 172 stores. CEO Lou D'Ambrosio is leaving in February, to be replaced by Chairman and hedge-fund manager Edward Lampert, who has minimal operating experience in retail management.

By 24/7 Wall St.

Forecast store closings: 300 to 350
Number of U.S. stores: 1,100
One-year stock performance: -53.6%

J.C. Penney has been going through a rough stretch. In the most recent quarter, same-store sales fell by 26.1% year-over-year. Even its Internet sales have taken a turn for the worse, falling 37.3% in the third quarter, compared to the prior year.

The retailer's current troubles began after former Apple (AAPL) retail chief Ron Johnson took the helm and launched an ambitious transformation plan that, among others things, aimed to wean customers off of heavy discounting and coupons, and simply give customers low prices right off the bat. Instead, retail strategists and analysts say, Johnson's vision has created confusion among customers and inhibited any potential turnaround.

By 24/7 Wall St.

Forecast store closings: 125 to 150
Number of U.S. stores: 1,114
One-year stock performance: 50.7%

Office Depot's (ODP) troubles can be traced  back to years of competition against OfficeMax (OMX) and Staples (SPLS), as well as big-box retailers like Walmart. All three major office supply chains suffered from reduced business activity during the recession, as well as the rise in popularity of online retailers such as Amazon. The company's North American division reported an operating loss of $21 million in the third quarter of 2012. Office Depot plans to relocate or downsize as many as 500 locations and close at least 20 stores. In the third quarter of 2012, the company closed four stores in the United States, and same-store sales were down by 4 percent year-over-year.

By 24/7 Wall St.

Forecast store closings: 190 to 240, per company comments
Number of U.S. stores: 689
One-year stock performance: 8.95%

The shift by customers away from print books toward digital books has hurt Barnes & Noble (BKS). Same-store sales during the nine-week holiday season fell by 8.2% year-over-year. The bookseller has tried to offset the declines in physical book sales with its Nook e-book reader, but sales of that device fell 13% compared to the previous year. The company has already been reducing store count over the past several years. In a recent interview with The Wall Street Journal, the head of the retail group at Barnes & Noble said he expected the company to have just 450 to 500 stores 10 years from now.

By 24/7 Wall St.

Forecast store closings: 500 to 600
Number of U.S. stores: 4,471
One-year stock performance: -2.2%

In November, with the holiday season just getting into full swing, GameStop (GME) announced it would close 200 stores in 2013. The video game retailer, hurt by growth in mobile gaming, which came at the expense of traditional console gaming, saw year-over-year revenue decrease 4.6%, and comparable-store sales fall by 4.4% for holiday period. For the third quarter of 2012 (the most recent for which numbers have been released), gross profits fell for GameStop's three core product segments: new hardware, new software and used products.

By 24/7 Wall St.

Forecast store closings: 150 to 175
Number of U.S. stores: 872
One-year stock performance: 80.8%

OfficeMax, like rival office-supply stores such as Staples and Office Depot, has been hit hard by both online competition and falling sales for technology products such as personal computers. In the third quarter of 2012, OfficeMax reported that same-store sales in the U.S. fell by 2.6%. Midway through the fourth quarter of 2011, the company announced that it would close 15 to 20 stores every year for the next five years. In addition, the company is in the process of downsizing by moving into smaller locations.

By 24/7 Wall St.

Forecast store closings: 450 to 550
Number of U.S. stores: 4,412
One-year stock performance: -68.1%

Earlier this month, RadioShack's long-term prospects took another hit when its partnership with Target ended after the two retailers were unable to design a mutually beneficial deal. RadioShack had operated mobile kiosks at 1,500 Target locations across the country.

The company recorded an operating loss of nearly $60 million in the third quarter of 2012, when same-store sales dropped by 1.6% year-over-year and revenue fell by 3.8%. In 2010 and 2011, the company closed 2.2% of its existing locations -- more than 120 stores in all.

By 24/7 Wall St.

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