Tech

Zynga To Cut 15 Percent Of Workforce; Acquiring Game Maker NaturalMotion

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Zynga

Zynga’s San Francisco headquarters. (Justin Sullivan/Getty Images)

SAN FRANCISCO (AP) — Zynga Inc. announced Thursday it was cutting 15 percent of its workforce in a turnaround effort while buying NaturalMotion, the company behind the hit mobile games “CSR Racing” and “Clumsy Ninja,” 

The company moved up its earnings results by a full week to coincide with announcing the $527 million acquisition and the job cuts. Investors sent shares up 69 cents, or 19 percent, to $4.25 in after-hours trading.

Zynga has been cutting jobs and posting losses as game players increasingly turn to smartphones and tablets. The company’s biggest hits, like “FarmVille” and “Mafia Wars,” have mostly been played on desktop and laptop computers. By buying NaturalMotion, it hopes to bolster its mobile games as its core business deteriorates. King.com, the maker of the popular “Candy Crush Saga,” has replaced Zynga as the No. 1 maker of games played on Facebook.

“We have an ambitious agenda and we are moving quickly to add capabilities that are complementary and strategic,” said CEO Don Mattrick in a statement. Mattrick left Microsoft’s Xbox division last July to take over as Zynga ousted founder Mark Pincus.

The company’s loss in the October-December quarter came to $25.2 million, or 3 cents per share. That’s down from a loss of $48.6 million, or 6 cents per share, in the same months the year before. Analysts expected a loss of 4 cents per share. Sales plunged 43 percent to $176.4 million, worse than the $183.5 million expected by analysts polled by FactSet.

But it hopes to counteract those losses with the purchase of NaturalMotion, which it said would boost adjusted profit.

“It’s a risky bet, but certainly they were in a position where they needed to be aggressive,” said Benchmark analyst Mike Hickey. “Don is well respected by the Street so they’re giving him the benefit of the doubt.”

The most recent job cuts come to 314 employees, and Zynga expects to save $33 million to $35 million this year from them.

Zynga also said it expected an adjusted profit of 1 to 3 cents per share in 2014, above the 4 cents per share loss analysts were forecasting.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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