According to reports, Activision has laid-off approximately 30 staffers from newly acquired 7-Studios. Kotaku says that the 30 staffers let go make up half of the firm's employees.
"Since the completion of its acquisition by Activision, 7 Studios has realigned its business to focus its development resources on the music genre," said Activision in a statement. "As a part of this realignment, the studio is reducing its workforce to better reflect Activision's upcoming slate of music-based games."
Purchased by Activision in April for work on DJ Hero and to "bolster its development capabilities", the purchase ultimately causing a lawsuit over the source code for Scratch: The Ultimate DJ
The lawsuit filed back in April claimed the publisher's intention was to delay the creation of Scratch and gain access to it's technology.
Sounds like a mess. More through the link.