Published on : Jan 31, 2014
Zynga, a leading worldwide provider of social games, has announced that it is purchasing NaturalMotion, a company that has earned much fame for its mobile games such as Clumsy Ninja and CSR Racing. The company also announced that it would be cutting nearly 15% of its workforce in an effort to turn around its profits.
The company pushed its earnings results forward by a week so as to coincide with its announcement of the USD 527 million deal as well its decision to cut back jobs. Following the announcement, the shares of the company rose by 22% (77 cents) reaching USD 4.33 in the after-hours trading.
With game players increasingly turning to tablets and smartphones, Zynga has been posting losses and cutting jobs. So far, Zynga’s post popular games such as Mafia Wars and FarmVille are played by gamers on laptops or desktop computers.
The company said that its latest acquisition is in keeping with its ambitious agenda to move towards adding strategic capabilities that complement its current line of business. The company’s current CEO is Don Mattrick, who left the Xbox division at Microsoft in July 2013. He replaced Zynga’s co-founder Mark Pincus as the CEO.
Zynga had posted losses to the tune of USD 25.2 million in the October-December quarter. Its sales had witnessed a decline of 43% to reach USD 176.4 million. These figures were worse than what the market expected at USD 183.5 million.
However, Zynga is confident that it would be able to counteract recent losses with the jobs cuts and its latest acquisition of NaturalMotion that makes games for mobile phones. As Zynga lays off 314 employees, it expects to save anywhere between USD 33 million and USD 35 million in the current year. At the same time, Zynga expects that it will be in a position to report full year profits of nearly 1 cent to 3 cents per share.