Zynga Inc. (ZNGA), the developer of online social games, said Monday it will cut 520 jobs or 18 percent of its workforce, and close various offices as some of its games are under performing. The company also said bookings in the second quarter will be lower-than-expected.
Following the announcement, shares of Zynga tumbled 12 percent at the close of markets, on a more than average volume.
Zynga said it will incur 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.
The company also expects to record $15 million reversal of stock-based expense in the second quarter due to the job cuts.
As a result, Zynga now estimates second-quarter net loss of $39 million to $28.5 million. Earlier, it estimated net loss of $36.5 million to $26.5 million.
Bookings are projected to be in the lower half of the outlook range provided in April, when Zynga forecast bookings of $180 million to $190 million.
"While our Farmville Franchise continues to perform well, other games are under performing," the company said.
Zynga said the cost cutting measures will result in an estimated $70 million to $80 million in pre-tax annualized cash expense savings.
The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013.
Zynga is the world's largest developer of online social games that are popular in social networking sites such as Facebook Inc. (FB) and on mobile platforms. Its offerings include FarmVille, CityVille, Words With Friends, CastleVille, and Zynga Poker.
Zynga shares closed Monday at $2.99, down $0.41 or 12.03%, on a volume of 64.8 million shares on the Nasdaq. In after hours, the stock gained $0.02 or 0.64%. In the past year, the stock has traded in a range of $2.09 - $6.36.
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