Zynga to Lay Off 15% of Employees as Sales Sink

SAN FRANCISCO (AP) -- Zynga Inc. said Thursday it is buying NaturalMotion, the company behind the hit mobile games CSR Racing and Clumsy Ninja, while cutting 15% of its workforce in a turnaround effort.

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 $0.77, or 22%, to $4.33 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.

"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.

Zynga's loss in the October-December quarter came to $25.2 million, or $0.03 per share. That's down from a loss of $48.6 million, or $0.06 per share, in the same months the year before. Analysts expected a loss of $0.04 per share. Sales plunged 43% 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 mobile game maker NaturalMotion.

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 a full-year profit of $0.01 to $0.03 per share, above the $0.04 per share loss analysts were forecasting.

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