Zynga weighed down by OMGPOP purchase

Zynga weighed down by OMGPOP purchase
Seth Tipps

By Seth Tipps

October 25th 2012 at 8:25AM

Social gaming giant plans 150 total layoffs

Earnings reports for Q3 2012 show Zynga is still struggling with the expense of the OMGPOP purchase.

The social games company bought the Draw Something developer for $180 million in April, drawing in 14 million daily active users.

The acquisition seems to have done more harm than good, as Draw Something's users trailed off over the summer, and the company is still posting massive expenditures related to the buyout.

Zynga's latest report shows costs of $95.5 million incurred as intangible assets during the purchase.

With Q3 net losses at $52.7 million, the math suggests the company is suffering for its agressive acquisition strategy.

These numbers have cost Zynga more than a dollar amount can show, as the company let go over 100 employees from its Austin office and shuttered its Boston studio.

This is part of a cost reduction plan that details a five per cent cut of the workforce - a total of some 150 jobs.

It remains to be seen whether cost reductions will help the troubled company, as some detractors argue that Zynga's problems are more than financial.

CEO Mark Pincus, however, remains adamant that the tide of social gaming will be enough to carry the company to new heights in the future.

"While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming," said Pincus.

"We're implementing a number of steps to drive long-term growth and profitability. The successful launches of FarmVille 2 and ChefVille in the third quarter demonstrate that when we develop great games, our large player audience engages.

"It's more clear than ever that along with search, shop, and share, play is a fundamental pillar of the Internet, and Zynga continues to be the leader."