AP News

Ahead of the Bell: Zynga gains on job cut plans


NEW YORK (AP) — Zynga's stock rose 5 percent in premarket trading Wednesday after the online game company disclosed it was eliminating games, studios and jobs to cut costs.

Zynga, which makes 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 the San Francisco-based company, which 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.

On Wednesday, the stock gained 11 cents to $2.31 before the opening bell.

Facebook, where many of Zynga's games are played, reported better-than-expected earnings Tuesday, although the social network said revenue from Zynga games declined. Facebook gets a cut of the virtual items people buy for games they play on the site.

Zynga is scheduled to report its quarterly results after the market closes on Wednesday. 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.

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 the peak and about 75 percent since the IPO.


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