GoPro slashes workforce, drops drone business
GoPro said it’s cutting more than 20 per cent of its global workforce and putting an end to its drone business after a disappointing fourth quarter.
The firm said it now expects sales of about US$340 million, well short of its own previous projection of as much as US$480 million and the average analyst estimate of US$472 million. Revenue took an US$80 million hit due to discounting for its Karma drones, as well as its Hero line of cameras, over the holiday season, the company said.
The stock fell as much as 33 per cent Monday to US$5.04, its biggest ever drop and its lowest price since going public in 2014.
GoPro has faced intensifying competition in the action camera market, as big tech firms from Samsung Electronics to Google have started selling similar products. Some analysts have said that the Hero cameras have become a commodity, and that GoPro’s main selling point now is its brand.
In November, Raymond James analyst Tavis McCourt wrote that there hasn’t been a noticeable bump from the newest Hero line.
GoPro’s Karma drone was supposed to help turn around the business upon its September 2016 launch. Instead, it’s been plagued by production delays and a recall of 2,500 units due to a battery issue.
The Karma also had to go up against China’s SZ DJI Technology Co., the biggest drone-maker in the world. GoPro said low margins and a hostile regulatory market in Europe and the U.S. makes the drone market “untenable.” It will exit the market after selling its remaining inventory and continue to service existing drones.
Chief executive Nicholas Woodman will reduce his 2018 cash compensation to US$1. Chief operating officer Charles Prober is also leaving the company next month.
GoPro is cutting more than 250 jobs, reducing its workforce to fewer than 1,000 people. The moves will result in an estimated charge of US$23 million to $33 million, the company said.