NVIDIA took a major hit when it announced that poor mobile GPU packaging would cost them up to $200 million to fix. Then AMD unleashed Radeon HD 4800 series that hurt NVIDIA in ways no one expected. Combine poor sales with high manufacturing costs and you get where NVIDIA is today. This has now forced them to reduce the workforce by 6.5%, roughly 360 jobs, to get back on track.
We will just have to wait and see what big bangs NVIDIA will release onto the market to get this right, because right now it doesn't seem like CUDA and PhysX are going to help much when AMD is offering better performance per buck, and with better margins than NVIDIA will ever have with the current generation of high-end cards price cuts won't help much.
The stock has dropped more than 60% since the start of the year and recently took another hit when it was downgraded due to poor outlooks, partially based on Intel's upcoming entry on the graphics card market. Not entirely fair since we expect AMD to be the much bigger threat for a long time ahead.
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