Gamasutra reported, following a tweet from hardware designer Jeri Ellsworth that read, "Yup. Got fired today. Time for new exciting projects."
Initial reports from employees included the phrases "great cleansing" and "large decisions," and a few claimed as many as 25 people were affected, though this number is unconfirmed, Gamasutra reported. The layoffs hit more than one department, including Android and hardware staff.
Ellsworth, at least, confirmed her own firing. She began working on next-gen gaming hardware at Valve, specifically living room PC controllers, in 2012. Ellsworth was concerned with transforming keyboard and mouse controls to a gamepad in a way that wouldn't interfere with current Steam game designs, or turn off those more comfortable with a traditional controller.
Valve's recent focus has been on the Steam Box, a hardware system that allows PC streaming and gaming on living room TVs. Ellsworth worked on controller prototypes alongside the launch of Big Picture Mode, a Steam interface designed for controller navigation.
We've contacted Valve for more information about the layoffs.
Update: Develop reports that Valve's Director of Business Development, Jason Holtman, left the company. Valve has yet to respond to requests for comment.
Update 2: Valve's employee page changed significantly sometime in the past month, as demonstrated by this comparison from Garry's Mod creator Garry Newman. There are eight names gone in the latest version: TF2 art lead Moby Francke, former Weta man Keith Huggins, Half-Life 2 programmer Tom Leonard, Portal team member Realm Lovejoy, Half-Life man Marc Nagel, ex-Lord of the Rings animator Bay Raitt, engine programmer Elan Ruskin, and Jason Holtman, mentioned above.