Zynga, a gaming company whose CEO donated $1 million to the pro-Barack Obama Super PAC Priorities USA, announced a restructuring plan Monday that will result in 520 layoffs and the closure of office locations for underperforming gaming apps by August.
Forbes reported that offices in Dallas, Los Angeles, and New York are closing. Employees of Zynga’s recently acquired OMGPOP revealed on Twitter they were out of jobs and that the SoHo, New York office had been chopped. Zynga hopes to save $70 million from their cost-reduction plan to increase their investment in mobile gaming.
"Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect," Pincus wrote to his employees today. "By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences," Zynga’s CEO Mark Pincus told Forbes.
The social gaming developer has suffered a major drought since its IPO debut in December 2011. Even DreamWorks Animation CEO and President Barack Obama’s biggest donor Jeffery Katzenberg could not prevent the tech company from suffering severe financial losses.
Katzenberg joined the company’s board in April 2011 to help guide the company through its IPO. Zynga’s Katzenberg told the Los Angeles Times while he does not consider himself a "gamer" he is a fan of Zynga’s building simulation games.
Last October the company’s stock price tumbled to $2.39, resulting in 160 employee layoffs. That same month, Pincus contributed $1 million to Obama’s Super PAC Priorities USA Action.
By the end of the year, Zynga had shuttered seven games including PetVille and Mafia Wars 2 and pulled others from app stores.
Three more games were axed in February for low user activity followed by the exit of Zynga’s chief game designer Brian Reynolds. Last month Zynga retired Dream Zoo to focus on mobile gaming projects.
CNBC’s senior stocks commentator Herb Greenberg blamed Pincus for Zynga’s shortcomings. Greenberg named Pincus in December to his list of "Worst CEOs of 2012," for his lack of strategic vision that resulted in the collapse of the stock price.