Zynga Sweeping Overhaul, Game-maker Cuts Staff, Ends 13 Games and Shutters Boston Office

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While Apple was busy unveiling its sleek new brand of products Tuesday rumors were circulating on gaming blogs and social networks about trouble at the San Francisco game-maker Zynga.

The company has laid off five percent of its full-time workforce, shut its Boston office and scaled back its Austin,Texas studio launching a sweeping overhaul that may see the loss of its Japanese and British offices as well, Reuters reported Tuesday.

Zynga was established by Chief Executive Officer Mark Pincus in 2007, rose on the success of its "Farmville" game which is played on Facebook, and went public in May of this year for $10 a share. Shares dropped 20 percent to what was then an all-time low last month of $2.82 based on expected third-quarter losses.

Poor demand for some games and a loss it sustained on its Omgpop acquisition were cited as the reasons. The rising popularity of mobile devices has also played a significant role in Zynga's losses.

Zynga is named for Pincus' now deceased bulldog.

In a memo from Pincus obtained by Reuters, he told staff the company was going to "sunset" 13 older games and may close its offices in Japan and Britain. It is also planning to cut back its investement in its new recent initiative, a game called, "The Ville."

"This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors," Pincus said in his memo.

News of the cost-cutting initiatives apparently helped the company's stock, which bounced back to $2.30 in after-hours trading after closing at $2.20 at the end of the day.

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