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Nvidia to cut workforce by 6.5 percent

Nvidia to cut workforce by 6.5 percent

Around 360 employees will be made redundant before the end of the third quarter. Nvidia says the cuts will affect all business units in all regions.

We have learned that Nvidia will shed 6.5 percent of its 5,500-strong global workforce—equating to approximately 360 employees—before the end of its third fiscal quarter.

The job cuts come following dramatic changes to the company's business outlook during the second quarter and will be company-wide cuts. There will be job losses in all business units, in all regions – because of this, there will be some internal reshuffling following the redundancies.

Although Nvidia's business outlook has changed, the company says it is still making significant progress in its key growth areas, namely with its CUDA parallel computing technology and also its Tegra system on a chip, and will continue to invest heavily in high growth opportunities.

Jen-Hsun Huang, Nvidia's CEO and president, said that although he regrets having to make the first cuts in the company's history, he believes they are necessary "considering the current business realities." He then continued by saying that "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."

It's fair to say that the last few months have been tough Nvidia. Not only did the company record its worst quarterly financial performance for almost six years, but it also revealed that GPU shipments were down by 20 percent and average selling prices also dropped by 25 percent in the last quarter.

If that wasn't enough, the company levied a $196 million charge to cover warranty repairs in the same quarter following higher-than-expected failure rates on some of its notebook GPUs in July. An angry shareholder has since filed a class action suit against Nvidia because the company allegedly knew about the mass failures as early as last August, but chose to keep the information from investors.

Earlier this morning, we managed to speak to Luciano Alibrandi, European director of PR - he explained to us that the cuts are regrettable but required in order to make the company more efficient for the growth it expects. "It's about realigning ourselves to be more effective in the future," he said.

When asked about its relationship to the high mobile GPU failure rates the company has suffered, Alibrandi responded by saying 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."

Alibrandi finished by adding that those employees affected by the job cuts will be offered severance packages, counselling and job placement services. Let's just hope everything works out for all those being made redundant.

Discuss in the forums.

13 Comments

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Jasio 18th September 2008, 21:42 Quote
This doesn't come as a surprise though... they took that 200 million $ hit to cover the GPU issues this year. Two lawsuits are coming up, and some say the $200 mill isn't enough to cover the problem in its entirety. Job cuts were to be expected. But who isn't cutting jobs eh? Didn't HP cut 24,000 jobs a few days ago? That's the size of laying off a medium sized town.
perplekks45 18th September 2008, 22:42 Quote
Dilbert anyone? If anything goes wrong... just re-org.
But yea, I agree with the above. FIrst reaction to bad sales or other problems is job cuts. Or, with German T-Com, they fire 23000 people to satisfy their shareholders.... :|
Amon 19th September 2008, 01:35 Quote
4800 family have anything to do with this?
roshan 19th September 2008, 02:13 Quote
One company cannot dominate for 2 years at least. NVIDIA was the winners for last two years.Amd ATI came strong. Same will be true for intel.Now the Intel is the CPU winners.Amd is the 2nd . All of the sudden that can change with a one great cpu architecture from AMD.
But Nvidia did wronge with larger 65nm gpu inventory and warranty claims. This is not about competition. It is strategically and technical failure from Nvidia.
Tim S 19th September 2008, 05:18 Quote
From what I've heard,, both officially and unofficially, it's nothing to do with the warranty claims... But it is related to how Nvidia underestimated AMD's ability to fight back. It's always sad when a company has to lay part of its workforce off, but I hope the 'blips' we've seen from Nvidia over the past 12 months help to refocus the company. Competition is important and we wouldn't have had the 4800 series if it wasn't for Nvidia, IMO.
The Infamous Mr D 19th September 2008, 06:02 Quote
Quote:
Originally Posted by Tim S
Competition is important and we wouldn't have had the 4800 series if it wasn't for Nvidia, IMO.

You're telling me. If it weren't for competition, we'd all still be using Pentium 4's. *shudder*
zr_ox 19th September 2008, 07:13 Quote
It's sad that the result of competition often results in job cut's.

One thing which I always find worrying is how short sighted the community can be. When Nvidia launched the 8800GTX it obliterated the competition, and continued to do so for two years. At this point it's probably the best GPU ever to hit the market. ATI had no response, and have only just clawed their way back into the fray with two incredible GPU's. During this time ATI were slated....BIG TIME!

Nvidia still hold the (legal....x2 not allowed) single fastest GPU crown. I believe that their domination over the last two years caused a lapse which has resulted in poor development for their mobile GPU range. Other issues with the 8800 series are not helping them.

When Nvidia were at the top ATI get's slammed by the community and because of two very good mid-range cards now it's Nvidia's turn to be dragged through the dirt? I really don’t get this mentality?

Don’t read this as the opinion of a fanboy since I have both 8800 and 4870's, for me it's what ever does the job best. If ATI had been capable of competing during the 8800 era then we would probably have better GPU's and Nvidia would not be in this mess, a lack of competition causes complacency.

Nvidia will fix their problems for sure, do you really think they would make it to the top and then just give up......NAH!

Still today people claim exclusive allegiance (Fanboy) Intel/Nvidia/AMD/ATI, I find this strange since as a consumer I'm interested in whatever gives the best performance....irrespective of brand!

Friday morning rant over
johnmustrule 19th September 2008, 07:34 Quote
It looks like AMD chose the perfect time to release the 4000series, with all there lawsuits n' such.
[USRF]Obiwan 19th September 2008, 08:34 Quote
Quote:
Originally Posted by zr_ox
It's sad that the result of competition often results in job cut's.

Nvidia still hold the (legal....x2 not allowed) single fastest GPU crown. I believe that their domination over the last two years caused a lapse which has resulted in poor development for their mobile GPU range. Other issues with the 8800 series are not helping them.

Well basically, Nvidia got arrogant and making not any kind of 'hush hush' those two years to come up with something much better. Noooooohh... they just profited for two whole years from one card, before amdti woke them up out of their dull little nap with better cheaper options like a rabbit out of the hat.

Nvidia's is to blame here, normally they suppose to come out every year with a better card but because the last two years they had no competition what so ever, they did nothing, but laying on the beach with a cocktail and a mountain of 8800 clones behind them. And laughing behind their sunglasses about some minor faulty stuff in the 8800 hardware. Aah so be it, the Jen-Hsun is shinning.

I don't get it anyway, how can they cut jobs if they have sold so many hardware the last two years, there was no competition at all. Hell everybody I know has a 8800 videocard, be it a GT/GTX/GTS/8600/8900 etc. What did Nvidia do with all the proffits?
steveo_mcg 19th September 2008, 09:14 Quote
See your comment about beaches and cocktails
spoon.uk 19th September 2008, 09:20 Quote
Good for us, not for people without job tho...
Star*Dagger 19th September 2008, 10:51 Quote
It is not good for anybody, and is a symptom of the MBA Groupthink that pervades corporate decision making. They are all playing from the same playbook and it doesn't work.

Corporate Capitalism is undergoing a collapse and are going to have to find new ways of doing business or go out of business.

Yours in Open Plasma,
Star*Dagger
roshan 20th September 2008, 03:08 Quote
Good for who? Nobody get benefited when competition is going down
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