Zynga Inc. (ZNGA) announced substantial cost reductions, including a workforce reduction and closure of various office locations that will result in an estimated $70 million to $80 million in pre-tax annualized cash expense savings.
As part of these initiatives, Zynga said it expects to complete a reduction in force of about 520 employees or approximately 18% of its global workforce. The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013.
Zynga stated it will record pre-tax restructuring charges of about $24 million to $26 million in the second quarter, and $2 million to $5 million in the third quarter. Zynga also expects to record an estimated $15 million reversal of stock-based expense in the second quarter of 2013 as a result of the net impact of these workforce reductions.
Zynga's updated outlook for the second quarter of 2013 and projects net loss to be in the range of $39 million to $28.5 million.
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