Games developer Zynga Inc(NASDAQ:ZNGA) is in serious trouble.in a bid to cut costs, the company is eliminating games, studios and jobs in a drastic move.
The one-time close ally of Facebook, for which it created the popular social media game `Farmville' said on Tuesday that it intends to reduce bout 5 percent of its workforce of 3,200 employees.
This is the first time that Zynga, which went public late last year, is resorting to job cuts.
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.
Zynga's stock has depreciated about 70 percent since its stock market debut, though on Tuesday it rose more than 3 percent after the announcement was made. The company is scheduled to report its third quarter results on Wednesday.
The fortunes of Zynga are closely allied to that of Facebook, from whom it derived about 15 percent of its revenues. With Facebook reporting better-than-expected results for the third quarter, investors are hopeful that Zynga may also follow suit.
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.
It had also warned about taking some measures to reduce costs that would 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.