By Sarah E. Needleman
Zynga Inc. founder and Chairman Mark Pincus is taking back the
reins at the troubled mobile-games company, ending Don Mattrick's
less-than-two-year stint as chief executive.
Mr. Pincus's return is effective immediately. Mr. Mattrick, the
former head of Microsoft Corp.'s Xbox gaming division, resigned as
CEO and is leaving the board. Mr. Pincus, who owns roughly 10% of
Zynga and has about 60% of voting rights, will receive a salary of
$1.
In an interview, Mr. Pincus said the past two years out of the
CEO spotlight have given him "enough time to reflect and process"
his past performance. "I can bring a deeper DNA strand and
intensity of focus," he said.
Zynga's tale is a case study in what happens to companies that
are heavily dependent on Facebook Inc. as a platform. Zynga was a
dominant player in games on Facebook at a time when the social
network was largely used on PCs. Once people began ditching their
computers, Zynga struggled to adapt to a world of devices and apps,
even though games today are more social than ever.
Mr. Mattrick was brought in July 2013 to jump-start that
transition and to inject strong leadership at the top. Mr. Pincus,
who once sought advice from executive expert Bill Campbell on how
to run a fast-growing company, stepped aside to focus on creative
strategy while Mr. Mattrick ran the business.
During his tenure at Zynga, Mr. Mattrick oversaw the $527
million acquisition of NaturalMotion, the U.K.-based studio behind
the hit "Clumsy Ninja," known for its physics-based gameplay. He
drastically slashed Zynga's payroll to less than 2,000 employees
after topping out at around 4,000 in 2012, and the company
redesigned several of its flagship games, such as "FarmVille" and
"Words With Friends," for mobile devices.
The moves couldn't lift Zynga's stock price, which has fallen
5.5% since Mr. Mattrick was announced as the new CEO. In a prepared
statement Wednesday, Mr. Mattrick said he plans to return to Canada
to "pursue my next challenge."
Mr. Pincus continued to operate as Zynga's product chief until a
year ago, when he shifted his attention to launching a startup
incubator called SuperLabs. Now he wants to get Zynga back to "what
differentiated us," he said.
"While we built this whole new DNA and muscle in mobile," Mr.
Pincus said, "we weren't able to reinvest and reestablish some of
what was our special sauce."
He said Zynga is preparing yet another new slate of mobile
games. "I hope to bring some of the entrepreneurship and intensity
that was helpful early on but also give leaders room to lead."
There is a long history of former executives returning to the
upper ranks at the companies they founded, particularly in
technology. Most notably is Steve Jobs, who famously transformed
Apple Inc. from a struggling niche computer maker into the most
valuable company on the planet. In 2011, Jack Dorsey came back to
Twitter as chairman to get involved with product development.
Zynga's change at the top comes a month before the company is
scheduled to report earnings for the first quarter of 2015. Mr.
Pincus will have just as much work cut out for him on the financial
side of the business as when he let go of the CEO title.
When Zynga reported earnings for the holiday fourth quarter, it
had increased revenue to $192.5 million, but the red ink piled up,
with losses growing to $45.1 million, or 5 cents a share. Wall
Street analysts expect that Zynga narrowed its first-quarter loss
to 2 cents a share from a year earlier, but with revenue sliding 9%
year-over-year to $147.6 million, according to Thomson Reuters.
The company said Wednesday that it is confident in its
outlook.
Zynga's shares, meanwhile, are still stuck below $3--around the
same price as when Mr. Pincus first passed the baton. And they are
a far cry from the company's peak intraday price of $15.91 in March
2012 or even the December 2011 initial public offering price of
$10.
The stock, which closed Wednesday in New York at $2.90, fell 10%
to $2.60 in after-hours trading, following news of the latest CEO
change.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
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