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Zynga to Slash Workforce by 18 Percent

Mark Pincus - Zynga - H 2012
Mark Pincus

The games-maker will cut 520 jobs and close some offices in order to save up to $80 million a year.

Zynga, the maker of social games like Words With Friends, said Monday it will lay off 520 people, or 18 percent of its global work force, in order to cut costs. The company also warned its loss in the second quarter would be wider than expected, news that sent the stock down 12 percent.

Zynga said the move to cut its workforce, as well as close some offices, will save $70 million to $80 million annually, though it means taking restructuring charges of up to $26 million in the second quarter and up to $5 million in the third quarter.

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"While our FarmVille franchise continues to perform well, other games are underperforming," Zynga said in a press release Monday.

Zynga has been struggling as demand for its games on Facebook has waned. 

"Today is a hard day for Zynga and an emotional one for every employee of our company," CEO Mark Pincus said in an email to employees first obtained by The Wall Street Journal. "We are saying painful goodbyes to about 18 percent of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company."

In his letter, Pincus boasted of recent releases like Running With Friends, whereby players maneuver their animated players through the streets of Pamplona, Spain, during the annual running of the bulls event.

"Mobile and touch screens are revolutionizing gaming," Pincus said in his letter. "Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect. By reducing our cost structure today, we offer our teams the runway they need to take risks and develop these breakthrough new social experiences."

Shares of Zynga fell 41 cents to $3 on Monday. The layoffs should largely be implemented by August.