Zynga's Pincus withdraws from operations amid turnaround

Wed Apr 23, 2014 7:10pm EDT
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By Malathi Nayak

SAN FRANCISCO (Reuters) - Zynga Inc (ZNGA.O: Quote) co-founder Mark Pincus is relinquishing the last of his operational duties at the social gaming company starting on Wednesday and retreating to an advisory role as Chief Executive Officer Don Mattrick pushes through a restructuring plan.

Zynga shares were up 5 percent in after-hours trading on Wednesday after closing at $4.42 on the Nasdaq.

Pincus, who remains chairman of the board, has decided to move on from day-to-day operations as chief product officer, Zynga said in a statement. He has been stepping back from the company that once dominated gaming on Facebook with "Farmville" and raked in over $1 billion in revenues, but is losing users to mobile game developers.

Pincus still has a strong grip over Zynga's management and corporate decisions because he owned 9.7 percent of the company with total voting power of 62 percent as of March 31, according to a regulatory filing last week.

On Wednesday, the company reported a 36 percent drop in March-quarter revenue to $168 million, although that beat analysts' forecasts of $146.5 million.

The number of monthly players continued to fall, slipping to 123 million, or less than half of 253 million at the end of the first quarter of 2013.

In July, Zynga hired Mattrick, the former head of Microsoft Corp's (MSFT.O: Quote) Xbox business, to replace Pincus as CEO. Mattrick has been managing a series of layoffs, cutting costs, reviewing the company's product pipeline and reshuffling top-level management.

In an interview, Mattrick said Pincus' decision to withdraw from a management role is a "vote of confidence" in his team's turnaround strategy and push into mobile gaming.   Continued...

Zynga CEO Mark Pincus speaks during the Zynga Unleashed event at the company's headquarters in San Francisco, California June 26, 2012. REUTERS/Stephen Lam