Zynga shares soar after appointment of Microsoft executive

Zynga has hired Don Mattrick, the former head of Microsoft 's entertainment division, as its new chief executive officer, seeking to reignite growth at the game developer. Mattrick will succeed Mark Pincus, who will remain chairman of the board and chief product officer.

Mattrick, who will also join the board, starts July 8th, with the challenge of turning around Zynga, which is suffering amid rising competition from upstarts such as King. com as well as a shift toward gaming on handheld devices. Zynga said last month it will cut 520 jobs, or 18 per cent of its staff, and close some offices amid disappointing results. The company had been rapidly growing its Irish operation, which employs about 54 people.

Mattrick's experience in the industry, which includes stints at Microsoft and Electronic Arts, may help San Francisco-based Zynga find new lines of revenue outside of Facebook, where it is losing users, according to Michael Hickey, an analyst at National Alliance Capital Markets.

“It does potentially demonstrate that he believes they have a compelling growth profile,” Hickey said. “He also adds credibility to an executive team that has been significantly compromised after their core Facebook business has deteriorated.”

Pincus will take a diminished role at the company he founded, a sign that his hard-charging management style and negotiating prowess -- once described by Google chairman Eric Schmidt as "fearsome" -- may have clashed with the needs of a large, publicly traded business.

Shares of Zynga jumped as much as 13 percent, the biggest gain since April 3rd, on the back of the news.

Bing Gordon, the venture capitalist who led Kleiner Perkins Caufield and Byers’ 2008 investment in Zynga and serves as a close adviser to Pincus, was instrumental in Mattrick’s hiring, said another person familiar with the matter. The two worked together as executives at Electronic Arts. Pincus and Mattrick first discussed opportunities at Zynga in March, when the two road-bike enthusiasts began going on rides together.

In a memo to Zynga employees yesterday, Mattrick said he plans to work closely with Pincus to restart growth.

“Zynga is a great business that has yet to realize its full potential,” Mattrick said in the memo, which was posted on Zynga’s blog. “I’m really proud to partner with a product focused founder like Mark and work with the executive team to grow the DNA of the company and lead this transition.”

Bloomberg