Zynga
CEO resigns, founder Mark Pincus steps back in
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[April 09, 2015]
By Malathi Nayak and Sai Sachin R
(Reuters) - In an abrupt changing of the
guard, Zynga has announced that Chief Executive Don Mattrick will step
down and founder Mark Pincus will return to lead the company as it
struggles to adapt to the changing tastes of gamers.
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Zynga Inc's shares, which have been below $5 for over a year, were
down as much as 11 percent at $2.58 in extended trading following
the news.
Sterne, Agee & Leach analyst Arvind Bhatia said the leadership
change had sent the "wrong message" because the San Francisco-based
company was beginning to move in the right direction under Mattrick.
Mattrick, who Zynga said will receive a $4 million payout, was given
the top job in 2013 to help turn around the company's waning
fortunes after it failed to capitalize on the popularity of its "FarmVille"
game with new hits. As chief executive, he focused on accelerating
Zynga's mobile game efforts.
Pincus stayed on as Zynga's chairman and chief product officer at
the time and relinquished the last of his operational duties last
year.
The company said he has requested an annual salary of $1 as CEO.
Mattrick, who headed Microsoft Corp's Xbox business before joining
Zynga, will also leave the board, the company said.
"I plan to return to Canada to pursue my next challenge," Mattrick
said in a statement.
Barclays analyst Chris Merwin said Zynga now needs "to prove they’re
able to execute even during yet another leadership transition if
they hope to regain investor’s confidence."
Zynga suffered a dramatic reversal of fortune in 2012 as gamers
dropped its lucrative, Facebook-based desktop games for mobile
offerings from rivals such as King Digital Entertainment Plc, maker
of "Candy Crush Saga.
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Pincus founded Zynga, once one of Silicon Valley's fastest growing
companies, in 2007, and the path to recovery has been tortuous. It
posted a loss of $226 million last year and non-GAAP revenue
dwindled to $694 million from $1.15 billion in 2012.
In February, Zynga said it would launch six to 10 new mobile titles
this year after it reported bookings of $182.4 million, about $19
million less than expected, according to research firm StreetAccount.
The company is also facing a U.S. lawsuit that accuses it of
defrauding shareholders about its prospects before and after its
December 2011 initial public offering.
(Reporting by Lehar Maan and Sai Sachin R in Bengaluru and Malathi
Nayak in New York; Editing by Don Sebastian and Andre Grenon)
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