UPDATE 1-Microsoft entertainment head may leave to be Zynga CEO -report
(Adds responses from Microsoft and Zynga, background)
SAN FRANCISCO, July 1 (Reuters) - Struggling games publisher Zynga Inc could replace its chief executive Mark Pincus with Microsoft Corp executive Don Mattrick, possibly as early as Monday, according to a report by AllThingsD that sent Zynga shares more than 10 percent.
Pincus, 47, controls a 61 percent voting stake in the gaming company he founded in 2007, according to financial filings from March, and he would have final say over his company's leadership.
Zynga's business, which relied heavily on selling virtual goods to gamers on Facebook Inc's platform, began to disintegrate a year ago as users tired of Facebook games. Pincus has been unable to turn around the company named after his pet bulldog, Zinga.
The company's shares have hovered at just 25 percent of its $10 price at the company's initial offering price in December 2011.
AllThingsD reported Monday that Don Mattrick, the president of Microsoft's Interactive Entertainment Business, who heads the company's gaming division and manages the Xbox business, could leave Microsoft to join Zynga, possibly as its CEO and "working in close partnership with its founder and current CEO Mark Pincus."
Zynga did not immediately respond to a request for comment. Microsoft declined to comment on the report.
Mattrick, originally from Vancouver, joined Microsoft in July 2007 from games maker Electronic Arts Inc, 18 months after Microsoft launched the second iteration of its game console, the Xbox 360.
Mattrick helped Microsoft turn the Xbox business into a profitable venture after years of losses, eventually propelling it into the No.1 selling console in the United States.
Zynga shares were up around 10.5 percent at $3.07 in afternoon trading on the Nasdaq.
(Reporting by Malathi Nayak, Gerry Shih and Alexei Oreskovic in San Francisco and Bill Rigby in Seattle. Editing by Andre Grenon)