Zynga Inc. announced that it will cut 15% of its staff. In addition, the company has decided to spend 527 million dollars to acquire a popular mobile developer. This decisions are part of the steps of Zynga Inc. to bring back its footing in casual video games. The stocks of the company rose after it narrowed its quarterly loss.
Zynga Inc., which is known for its “FarmVille” and casino-style games, made a statement saying that about 314 people will be fired, mostly at its San Francisco headquarters. The company said that it has agreed to purchase NaturalMotion Ltd, which is based, for 391 million dollars in cash and 39.8 million shares of Zynga, which are estimated to 136 million dollars.
Don Mattrick, who left Microsoft Corp. to take the position of Chief Executive Officer at Zynga in July 2013, is shifting the focus of the company towards games for smartphones and tablets. Two popular mobile titles – “CSR Racing” and “Clumsy Ninja” – are added by the acquisition to the three segments that has been targeted by Mattrick for growth: Zyngas “Ville” games, virtual gambling and puzzle games.
Chief Executive Officer Mattrick said in an interview cited by Bloomberg: “The core business is regaining some of its swagger. What we have now is the right base to build upon. Weve got five key brands, and five key areas we know consumers care about.”
When it was under the lead of its founder and former Chief Executive Officer – Mark Pincus, Zynga missed a consumer shift away from titles played on Facebook to mobile devices applications. Mr. Mattrick announced that “FarmVille” is expected to debut on mobile devices by June 2014, and that three-fourths of the companys new titles this year will appear first on such devices.
One of the analysts working for Wedbush Securities – Michael Pachter, said for Bloomberg: “Mattrick is saying and doing all the right things. They need to beef up their mobile capability and this acquisition does so. Hes telling the street hes committed to fixing Zynga.”
Michael Olson, who is an analysts of Piper Jaffray Cos. wrote in a note on January the 29th: “Mobile monetization is improving each quarter.” Mattrick “may have the leadership skills and enough support from jey investors to turn the company around.”
According to CNN Money, the current share price of Zynga Inc. is 4.09% up, and its one-year return rate is 6.32% down. The 19 analysts offering 12-month price forecasts for Zynga Inc. have a median target of 4.00, with a high estimate of 5.00 and a low estimate of 2.50. The median estimate represents a 12.36% increase from the last price of 3.56.
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