BEIJING, Aug. 10 (Xinhua) — Nvidia CEO Jensen Huang has reportedly assured the company’s more than 22,000 employees that Nvidia will not lay off employees, at least in the short term. Although the company earlier issued a preliminary earnings warning, saying that second-quarter revenue will be lower than previously expected.
NVIDIA had issued a warning on Monday that second-quarter revenue was expected to be $6.7 billion, down 19 percent sequentially and up 3 percent year-over-year due to a downturn in its gaming business. The revenue was below the $8.1 billion expected by NVIDIA and Wall Street analysts.
In response, Jen-Hsun Huang said in an email to employees that the second-quarter results were “significantly lower than expected,” largely due to a slowdown in the gaming business. But he also assured employees that Nvidia’s fundamentals remain strong and demand remains robust.
He said: “What does this mean for us? Will we lay off employees? No. On the contrary, we gave you a raise. On the contrary, we’ve also given you a raise to take care of your families because of the severe inflation that all of you are facing.”
It’s unclear whether Jen-Hsun Huang was referring to the pay raise as a new initiative or as a more general discussion of the company’s compensation practices. Of course, Jen-Hsun Huang did not rule out the possibility of future layoffs in his email.
In response, Nvidia declined to comment.
Jen-Hsun Huang also said in the email that NVIDIA will use this current opportunity to make the company better and more efficient. Moreover, NVIDIA will continue to maintain “the current level of investment”. He said: “We will collaborate as much as possible, which is a hallmark of our corporate culture; we will find every opportunity we can and reuse it; we will find and eliminate all wasted time, processes and materials. Seize this opportunity to make NVIDIA faster, leaner and more agile.”
As NVIDIA promises no layoffs, at least in the short term, tech industry peers such as Oracle and Robinhood have already made cuts. Other companies have also “tightened their belts” in different ways, including canceling new hires.
At the end of the email, Jen-Hsun Huang urged Nvidia employees to turn their energies to the company’s investments in cutting-edge areas such as metaverse and artificial intelligence. These areas, he said, will drive the company’s future business growth. Jen-Hsun Huang said, “Let’s maximize our alertness and flexibility, and kick into high gear to meet the challenges ahead while continuing to do the work of the present.”
NVIDIA expects gaming business revenue to reach $2.04 billion in the second quarter, down 44 percent sequentially and 33 percent year-over-year. By comparison, data center business revenue will reach $3.81 billion, up 1 percent sequentially and 61 percent year-over-year.
Just days ago, Intel and Sony also lowered their annual earnings estimates, mainly concerned about declining demand. Today, consumers are increasingly wary of buying non-essential items such as laptops and video game consoles, leading to some weakness in the gaming industry, which was thought to be weathering the economic downturn.
