Nvidia Trims Workforce by 6%
09/18/08 - 04:40 PM EDT
Alexei Oreskovic
SAN FRANCISCO -- Nvidia(NVDA Quote - Cramer on NVDA - Stock Picks) is the latest tech shop to dust off the pink slips, announcing Thursday that it is cutting 6.5% of its workforce.
The Santa Clara, Calif., maker of graphics processors said it will incur a restructuring charge of between $7 million and $10 million in the current quarter as a result of the layoffs. Calling the layoffs difficult, but necessary in light of current business realities, CEO Jen-Hsun Huang said Nvidia would continue to invest in selective high-growth opportunities. "We are taking fast action to enhance our competitive position and restore our financial performance," Huang said in a statement. "All of us at NVIDIA are determined to emerge from these challenges an even stronger company." The job cuts -- Nvidia's first since becoming a publicly traded company 9 years ago -- come a few days after Silicon Valley giant Hewlett-Packard(HPQ Quote - Cramer on HPQ - Stock Picks) announced plans to layoff almost 25,000 in the wake of its $13.9 billion acquisition of EDS. While Hewlett-Packard has so far shown itself immune to the economic troubles roiling various businesses, Nvidia is cutting its workforce as is strives to regain its footing amid fierce competition from a re-invigorated ATI, a division of Advanced Micro Devices(AMD Quote - Cramer on AMD - Stock Picks), slackening consumer demand for the desktop PCs that use its chips and a defect in some of its products. In August, Nvidia posted its first quarterly loss in six years as $196 million in product defect charges put a dent in its income statement and aggressive price cuts eroded its profit margins. The company's stock price has plummeted roughly 45% since July.
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