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Zynga: 'FarmVille' maker cuts 5 percent of staff, reduces games

Zynga, the online gaming company behind 'FarmVille,' and 'Draw Something' will lay off 5 percent of its full-time workforce and eliminate less popular games in a bid to cut costs. Zynga makes five of the 10 most popular games on Facebook. 

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Stephen Lam/Reuters/File
Zynga Chief Mobile Officer David Ko speaks during the Zynga Unleashed event at the company's headquarters in San Francisco, California in this June 2012 file photograph. The popular online gaming company is reducing staff and closing studios in an attempt to cut operating costs.
  • By Sarah Skidmore AP Business writer

| Portland, Ore.

Online game company Zynga Inc. is eliminating games, studios and jobs in a bid to cut costs.

The maker of social-media games including "FarmVille" and "Texas HoldEm Poker" said Tuesday that it will cut about 5 percent of its full-time workforce. It's the first-ever round of layoffs at Zynga, which is based in San Francisco and has about 3,200 employees.

Zynga also said it will get rid of 13 older games and reduce its investment in the game "The Ville." It will close its studio in Boston and may close studios in Japan and the U.K. It runs 18 studios worldwide.

Its slumping stock rose more than 3 percent in aftermarket trading following the announcement, which came a day ahead of Zynga's third-quarter earnings report.

The stock also likely got a boost from a better-than-expected earnings report Tuesday by Facebook Inc. Zynga is by far the No. 1 gaming company on Facebook.

Zynga said earlier this month that it expected to post a third-quarter loss due to weak demand for some of its titles. It said its revenues would likely be nearly flat compared to the same period last year.

The company also previously announced that it would adopt some broad cost-cutting measures to help improve its performance.

CEO Mark Pincus said that the job cuts were the most painful part of the overall cost-reduction plan, which also includes significant cuts in spending on data hosting, advertising and use of contractors.

Zynga makes five of the 10 most popular games on Facebook, according to researcher AppData. In the latest quarter, Zynga accounted for 7 percent of Facebook's total revenue, down from 10 percent in the second quarter and 12 percent in the third quarter of 2011.

Zynga's shares rose 7 cents to $2.27 in after-hours trading.

The company went public in December at $10 per share and its stock price peaked in March at $15.91. The stock has lost about 85 percent of its value since then.

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