More Zynga layoffs predicted

Analyst Michael Pachter expects new CEO Don Mattrick to detail strategy next week, thinks company can return to profitability next year.

Zynga laid off more than 500 employees in June, but the company may have just been warming up. In a note to investors, Wedbush analyst Michael Pachter said he expects Zynga to announce additional layoffs on Thursday, when the company reports its third quarter results.

The layoffs will be just one of a number of streamlining initiatives from new CEO Don Mattrick, Pachter said. The June round of cuts was made just prior to Mattrick’s appointment as CEO, and Pachter said the executive planned to spend his first 90 days “conducting a top-to-bottom business unit review and headcount review,” among other things. Layoffs aside, Pachter expects Mattrick to have success turning the Zynga ship around.

“Zynga has had a rocky 2013 so far, but we believe that CEO Don Mattrick has the skills and experience to make necessary changes, and if he streamlines the company’s cost structure and stabilizes the core business, we think that there is potential for shares to appreciate above our target,” Pachter said. “We have modeled 2013 conservatively, but believe the flexibility inherent in Zynga’s business model makes a return to profitability (as early as 2014) far more likely than a period of sustained losses.”

Pachter has given Zynga shares an “outperform” rating, with a 12-month price target of $4.25. It opened today’s trading at $3.56.

 

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Three more senior execs leave Zynga

Don Mattrick tightens up management ranks at Zynga

Zynga’s new CEO Don Mattrick is already making serious moves, announcing today on Zynga’s blog that three long-time senior executives are leaving Zynga. Chief technology officer Cadir Lee, chief people officer Colleen McCreary and chief operating officer David Ko “will be leaving the company to pursue other interests,” according to Mattrick’s blog post.

Mattrick did acknowledge the contributions of the three departing execs: “Each person has contributed to the growth of Zynga and I would like to take this opportunity to thank Cadir Lee for his dedication in the creation of a world class technical organization during his 5 year tenure, Colleen for her work with our recruitment and people process over the last 4 years and David Ko for the 3 years that he spent in leading various teams across the organization. We appreciate their contributions to Zynga’s first chapter and wish them well in their future endeavors.”

The organizational moves also shuffled other execs, putting responsibility for particular games in very clear order. The new organization should make it easier to spot which areas are under-performing, so the pressure will be on these executives to make their games do well.

The reorganization continues the string of executive departures that has been a regular occurrence for Zynga over the past year. Mattrick is making his mark on the company, and investors will be watching over the next few months to see what impact these changes will have.

 

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Xbox chief Don Mattrick leaving Microsoft

Sources have told AllThingsD that Mattrick is close to joining Zynga, possibly to take the role of CEO.

Although the news is not yet official, Kara Swisher of AllThingsD is reporting that Don Mattrick, Microsoft’s head of the Interactive Entertainment Business, is on his way out. Citing “multiple sources close to the situation,” AllThingsD says that Mattrick is close to joining social games firm Zynga. In fact, Mattrick may be working in close partnership with Mark Pincus, becoming the new CEO (apparently meaning Pincus would take another executive role at the company).

“While it is not unusual for a founder to give up such power, it certainly underscores Pincus’ commitment to reviving Zynga,” says Swisher.

Although there’s been much talk of management reshuffling and overall restructuring at Microsoft, this move does not appear to be part of that plan. Of course, it’s easy to assume that Mattrick is moving on following the major heat that his Xbox division took after severely fumbling the ball at E3, allowing SCEA boss Jack Tretton to enjoy a massive PR victory. The Xbox One policy reversal may have helped calm the waters, but Microsoft clearly has much PR work to do still in navigating the stormy next-gen seas. Whether Mattrick’s moving on is at all related to the Xbox One reception is unclear at this point.

The word is that the news could be officially announced today after the markets close. We’ll keep you posted.

 

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Microsoft has $1 billion for exclusive Xbox One titles

Don Mattrick: “I think, candidly, people are way, way under-indexing how hard we’re punching”

Microsoft is ready to invest around $1 billion in the development of exclusive games for the Xbox One.

That’s according to a report from Official Xbox Magazine, in which Don Mattrick and Phil Spencer discuss Microsoft’s strategy for first-party development. The entertainment focus of the Xbox One reveal event led to widespread accusations that the company had neglected the gamers on which its business is built. However, Mattrick believes that the breadth of the Xbox One offering has been under-estimated.

“We just ran through our [release slate] and counted the number of exclusives, and looked at the amount of money that we’re spending and the deals that we have, exclusive windows and [things to create differentiation],” he said.

“I think, candidly, people are way, way under-indexing how hard we’re punching.”

Even before the event, Microsoft pressed the idea that its E3 presentation would be focused on games, but it did reveal that it has 15 exclusive games ready for the Xbox One’s first year, including 8 new IPs.

“There are great hits, there’s innovation, and there are world class creators plugged in,” Mattrick continued. “You know, I keep track of it all, and I hope everyone here does – we kind of look back at all the different years and at what we shipped, how many units have sold. There’s a lot of hyperbole about things, but I think we’re going to deliver.”

The doubt surrounding Microsoft’s core game strategy is just one of many pressing issues to be addressed at E3. So far, the company’s messaging around controversial topics like the Xbox One’s online requirements and its approach to used games has been confusing, with senior executives occasionally contradicting one another when speaking to the press.

Microsoft’s E3 press conference will be take place on June 10, 2013.

 

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Microsoft to announce next-gen Xbox on May 21

As expected, the company will be holding a special event prior to E3 to unveil its new Xbox [UPDATE: The event will be live streamed]

Microsoft finally announced today that it’s planning to unveil its next generation plans during a special event on May 21 at Microsoft’s Redmond campus. The news came via press invites sent out to media this afternoon.

The event, dubbed “A New Generational Revealed”, lists a start time of 10 a.m. and mentions that Don Mattrick will lead the announcement. And in case there’s any doubt that the event is to announce a new Xbox, the invitation also includes the Twitter hashtag #XboxReveal.

Given all the controversial rumors about the next Xbox being always-online and requiring players to possibly need to be online even to play solo, it’ll be very interesting to see what the final feature set on the new hardware ends up being. Many are expecting hardware specifications somewhat similar to what Sony is including in the PS4, and given Sony’s developer-centric and more open approach to the PS4, a number of developers are hopeful that Microsoft will be equally open with the next Xbox.

Update: Microsoft representatives have confirmed to GamesIndustry International that the event will be streamed live on Xbox.com, Xbox Live and it will appear on Spike TV. Additionally, Microsoft will be showcasing its next-gen lineup for the next Xbox at E3 this year with an event at the Galen Center in Los Angeles on June 10. That event will be streamed online as well.

 

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