"We just finished a project with [Activision] that got completed," Mays said. Apparently, the developer had another project that was already "in the works for months" when an unnamed publisher pulled out, but Mays said it directly caused the layoffs. "That resulted in us having too many people so we had to do a layoff," he explained. Mays also noted that SK is in the process of negotiating new projects, and that if things work out, he's hoping to rehire as many people as possible.
Update: This post originally stated that Activision was the publisher cited as canceling a project with Silicon Knights, as reported by Financial Post. The source has since altered its text from "We just finished a project with [Activision Blizzard Inc.] that got canceled," to "We just finished a project with [Activision Blizzard Inc.] that got completed." We apologize for any confusion this may have caused.