The web has been ablaze today with rumors and reports of Valve conducting layoffs, though the company has not confirmed or denied that layoffs occurred today. However, Gabe Newell has sent a statement to Engadget that says Valve is not canceling any projects or changing any priorities.
We don't usually talk about personnel matters for a number of reasons. There seems to be an unusual amount of speculation about some recent changes here, so I thought I'd take the unusual step of addressing them. No, we aren't canceling any projects. No, we aren't changing any priorities or projects we've been discussing. No, this isn't about Steam or Linux or hardware or [insert game name here]. We're not going to discuss why anyone in particular is or isn't working here.
It's interesting that Valve wouldn't deny the rumors and reports of layoffs if there haven't been any. However, just because they haven't denied it, it doesn't mean that there have been layoffs. We'll be sure to let you know as soon as we find out more concrete information.