The company makes this move to become stronger, officials say

Sep 19, 2008 07:03 GMT  ·  By

It looks like NVIDIA is going through a difficult period of time lately, with two law suits filed against it on the faulty graphics cards issue, 20 percent less shipments and average selling prices going down by 25 percent, which made it record the worst quarterly revenue in almost six years. The latest news unveiled that the company is planning to cut some jobs before the end of the third fiscal quarter. Around 360 NVIDIA employees will be laid off, meaning that the company will remain without 6.5 percent of its 5,500-strong global workforce. According to the Santa Clara-based company, all business in all regions will be affected.

NVIDIA's business outlook underwent through dramatic changes during the second quarter of this year, and the job cuts are the consequence. The employees that will be made redundant come from all business units, and all regions, meaning that we should witness some internal reshuffling after that. The green company noted that it is still making significant progress in its main interest areas like the CUDA parallel computing technology and the Tegra system on a chip. The graphics cards manufacturer plans to continue investing in growth areas.

According to Jen-Hsun Huang, NVIDIA's CEO and president, these are the first job layoffs in the company’s history, and they are necessary “considering the current business realities,” although regrettable. “We are taking fast action to enhance our competitive position and restore our financial performance. All of us at Nvidia are determined to emerge from these challenges an even stronger company,” he added.

Besides the bad quarter, NVIDIA also had to cover warranty repairs for the notebook GPUs experiencing higher-than-expected failure rates in July, totaling a $196 million charge. Some of the shareholders filed suits against the company saying that they should have been informed on the faulty chips.

According to Luciano Alibrandi, European director of PR, the redundancies are not connected to these problems, but are meant to make the company stronger. “It's about realigning ourselves to be more effective in the future,” he said. Alibrandi also added that “this has nothing to do with the mobile GPU problems; instead, it's all about re-focusing the company for the challenges it faces in the future. Fundamentally, the biggest challenge is to make the GPU more relevant with innovations like CUDA and Tegra, where we're providing something revolutionary to the market.”

He revealed that severance packages would be offered to the employees laid off, as well as counseling and job placement services.