After a disappointing quarter, an outgoing COO, and ever-intensifying competition in the action camera market, GoPro is looking at shutting its drone business. The company said that it’s slashing 20 percent of its global workforce bringing down the number of employees below 1,000.
As Bloomberg reports, GoPro expected to see sales of about $340 million (approximately Rs 2,100 crore), less than its own projected sales of $480 million (approximately Rs 3,050 crore) against the average analyst estimate of $472 million (approximately Rs 3,000 crore). The Karma drone, which was expected to turn around the company’s fortunes when it launched in 2016, instead brought more complexities to the struggling business owing to battery issues and production delays.
GoPro revenue took an $80 million hit owing to the discontinuation of the Karma drones and the Hero line of cameras over the holiday season. As of Monday, the stock fell 33 percent to $5.04 (approximately Rs 321), its biggest ever drop since the company went public almost four years ago.
The once popular action camera maker is facing stiff competition not only from other camera makers such as DJI, but also brands such as Samsung, Sony, Google, and even Xiaomi, who have ventured into offering their own affordable range of action cameras. Meanwhile, GoPro CEO Nicholas Woodman will reduce his 2018 cash compensation to a meager $1 (approximately Rs 63). The COO of the company Charles Prober is also stepping down in the next month.
The job cuts and restructing is expected to result in an estimated charge of $23 to $33 million (approximately Rs 146 to Rs 210 crore), most of which will be recognized in the first quarter, the company said.
In a press release, the company said,”GoPro’s sharper focus will enable an $80 million reduction in operating expenses compared to 2017 levels, resulting in a target operating expense level of below $400 million for 2018 on a non-GAAP basis.”
The company further said that the hostile regulatory environment in Europe and the United States have made the aerial market untenable and GoPro will exit the market after selling its remaining Karma inventory. However, GoPro will continue to provide service and support to Karma customers.
Woodman is quoted as saying,”GoPro is committed to turning our business around in 2018.” He further added, “We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018.”