Zynga’s Boston, Austin Layoffs Today: “Almost Everyone Was In The Dark”

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UPDATE: Zynga CEO Mark Pincus has confirmed this news.

We have more on the backstory behind Zynga’s layoffs today. None of the rank and file employees knew where the cuts were coming until this morning, although senior management had planned cuts ahead of time (just as Zynga indicated this month when it lowered its bookings estimates for the year).

This morning, Zynga’s senior vice president of games Todd Arnold came into the Boston office and told the studio of 50 people that the company was shutting it down.

Similarly in Austin, most of the employees (about two-thirds of which were working on The Ville and one-third on Bingo), had no idea until today. We still don’t have final figures on the total number of layoffs and Zynga hasn’t replied to requests for comment. Zynga finally confirmed the layoffs and we’re probably looking at a number that’s around 150 employees.

Many Austin employees are getting offers to transfer back to San Francisco and The Ville is being transitioned into maintenance in the company’s offices in India — the way Zynga sunsets a lot of its less popular games.

“Almost everyone was in the dark,” says a source close to the Austin office.

Meanwhile in Boston, the entire studio is being let go. In fact, that office was on the verge of launching a product that many in the company were internally excited about. But up until then, the office had mostly been helping out with the FarmVille sequel.

“That game will not see the light of day. They didn’t want to cancel that title. It was painful, but they wanted to save cash,” said a former employee. “I think they just needed to cut hundreds of people off the payroll and this was the easiest way to to do that. They looked at who was not working on a live game.”

We’re also hearing from former employees that the Chicago office is indeed seeing layoffs. But that office is relatively young and didn’t even function as a development studio until a few months ago. There are no layoffs in Chicago.

Even though the layoffs coincided with Apple’s launch of the iPad Mini, the timing had more to do with Zynga’s upcoming earnings announcement.

“[CEO Mark] Pincus wants to be able to say that the company’s profitable but that’s harder as revenue goes down,” said a former employee. “They’re doing short-term things that don’t make any sense at all if you’re thinking about this being a stable company with $1.6 billion in cash in the bank.”

Right now, Wall Street investors are valuing the company at $1.67 billion — which is almost exactly what the company had on-hand in cash, short-term and long-term investments at the end of the second quarter. Essentially, Wall Street is saying that the business itself has hardly any value beyond the cash it has on-hand, which has raised speculation that Zynga could be an interesting acquisition target.

That said, this source added that Pincus earnestly wants to be successful as a public company CEO. Pincus’ father, in fact, coached many CEOs of publicly-held companies on investor relations throughout his career.

“Mark has enough voting rights that he doesn’t have to sell. He’s the king of keeping his options open. He has a desire — just like he says — to run this company for the rest of the his life as an Internet treasure,” says a former employee.