This is called restructuring of assets while trying to reduce costs. Their finance team probably did some number crunching, took at a look at their EBITDA number, and saw that there were rooms for improvement.
Having multiple studios increases the cost to do business, it's more overhead. A capital expenditure like acquiring another company was probably done with the help of a partnership or investor - and therefore didn't directly cut into the business' yearly expenditures. There are probably a dozen or more examples to give reason for the choices that they've made, based on their new, current predictions on where the industry and the company should go.
Business houses large gambles based on predictions. It's the best that any business can hope for, is that their predictions are correct. The only thing that's certain for a business is change - those business' that do not keep up with the pace of change often see a restructuring of assets and money like what it looks like Zynga is doing - those that stay stale in such situations often find themselves in a bit of a cluster - like we're now seeing with Yahoo!.
I know what Zynga is, but do not keep up with the company nor know of it's relations - I will say though that there are people at the top of Zynga who get paid a lot of money to make these decisions to make sure that their EBITDA is in the positive and changes like this at least show that they've recognized the need for change and are doing it.
I really don't get this company. So I applied to Buzz Monkey when I was unemployed over 2 years ago. I'm thankful I didn't get the job because they got bought out by Zynga a year later, and then had layoffs a year later in June 2013. About 1 1/2 years ago I was also looking at Zynga Seattle. And just last week that studio was shut down. The first round of layoffs was 520 people, and now I believe it is another 300. I dodged 2 bullets so far and am definitely dodging a 3rd bullet now:
What bothers me is I was talking to Zynga Orlando, that is looking to staff up to like 100 people asap. WTF is up with this company? Why don't they use existing resources, why do they buy companies and dump them. They just bought another company last week which I would bet they layoff or close in 2 years. And now they have this Orlando studio which sounds like they are doing exactly what Zynga Seattle was doing.
What is also funny is as I talked to them they were extremely surprised I currently had a job (like 3 comments about it right at the beginning of chatting with them). After thinking about it I was wondering if they get some crazy tax credits when hiring unemployed people. I know my current job did that when I came on board, they got a tax credit for hiring me. I just was like maybe they only hire unemployed people to get tax credits, and then anticipate laying off hundreds of people all the time so they can hire different unemployed people and get more tax credits. It just sounds strange all around. 800 jobs lost in a year? I don't think I could ever go to Zynga and I'm trying to figure out the "acquire and fire" mentality/strategy.
Edited by DocBrown, 10 February 2014 - 11:38 PM.