September 18, 2008, 7:37 pm
Nvidia Cuts 6.5 Percent of Its Workforce
By Ashlee Vance
Nvidia, a leading maker of graphics chips, added to its recent woes by
announcing Thursday afternoon that it will lay off about 6.5 percent of
the company’s workforce, or close to 360 people.
The layoffs will hit all of Nvidia’s global offices and departments,
said Hector Marinez, Nvidia spokesman, and should be completed by
October. Nvidia plans to take a $7 million to $10 million charge in its
third quarter to cover the restructuring.
Nvidia is best known as a graphics chip supplier for gaming enthusiasts.
Its business, however, extends to graphics chips sold to a wide variety
of customers for handling intense video jobs, such as designing
airplanes or creating animations.
Over the past couple of years, Nvidia has worked to push its silicon
even deeper into corporate accounts by opening up some programming
interfaces on the graphics chips. This has allowed oil and gas firms,
manufacturers and biotech firms, among others, to run certain
applications on the graphics processors. In the past, those applications
were typically run on more mainstream chips from Intel and Advanced
Micro Devices. While this could one day result in a large, new business
for Nvidia, the company has been distracted by these efforts, according
to some analysts.
As a result, A.M.D., which acquired Nvidia’s major rival ATI
Technologies, has managed to make gains.
“Nvidia took their eye off the ball, which is their current business,”
said Hans Mosesmann, a semiconductor analyst at Raymond James. “They
underestimated A.M.D., and A.M.D. came out with products much better
than expected at very aggressive price points.”
Even worse in the near term, Nvidia announced in August that a product
defect would cause it to take a $196 million charge. That news, coupled
with a 5 percent drop in second quarter revenue to $893 million, has
concerned the company’s investors.
Thursday’s announcement did not boost investor confidence. Nvidia’s
shares dropped more than 8 percent to about $10 in after-hours trading,
although they were rebounding in very late trading.
http://bits.blogs.nytimes.com/2008/0...ref=technology
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