Zynga Is Laying Off 18% Of Its Staff And Shuttering 3 Offices

Zynga’s Mark Pincus. Getty / Larry Busacca

Zynga is letting go of 18% of its 2,900-person staff. AllThingsD’s Kara Swisher first reported the news.

Its Los Angeles, Dallas and New York offices will be shutting down; about 55 people work in the LA office.

The company which makes popular social games, including Words With Friends, had a tumultuous IPO in 2011.

Cutting the 520-some jobs will save Zynga about $80 million.

Sources said the reason for the more substantive cuts now, after earlier ones in the fall, is because the decline of its Web business has been more drastic than anticipated, while the rise of its mobile business slower than needed,” Swisher reports. 

Last fall, Zynga laid off 5% of its staff. During its last earnings call, Zynga CEO Mark Pincus repeatedly stated that 2013 would be a “transitional” year for the gaming company as it shifts from a desktop to mobile-first operation.

UPDATE: Zynga just released a statement confirming the 18% cuts. Meanwhile, shares are still halted. Here’s the release:

Zynga Inc. (ZNGA), a leading provider of social game services, today 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 expects to complete a reduction in force of approximately 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 will record pre-tax restructuring charges of approximately $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.

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