GoPro confirms layoffs, exit from drone business

Ivan Schwartz
January 9, 2018

GoPro said that new regulations being considered in the United States and Europe would reduce the overall market for recreational drones. CNBC also reported GoPro has hired JP Morgan Chase to help it seek a potential sale. Earlier, shares had hit an all time low of $5.04, down 33%.

GoPro is exploring a sale after a tumultuous couple of years that included multiple rounds of layoffs, shrinking sales, and a plummeting stock price.

"It is our responsibility to scale the business, so if the right opportunity presented itself, it's something we would consider", it added.

GoPro is shutting down its drone business and laying off 20% of its staff due to weak demand for its products.

Before U.S. stock markets opened, GoPro said the job cuts would leave the company with less than 1,000 workers, down from its current level of 1,254 employees.

The company cut the price of its latest HERO6 cameras to US$399 from US$499 this week, a decision that it said would hurt revenue by around US$80 million in the fourth quarter.

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While the company will continue to support those customers who purchased its drone product, Karma, company officials said they will no longer be in the drone marketplace.

Morgan Stanley said in a research note yesterday that the price cut would make earnings growth hard in fiscal 2018.

GoPro today released preliminary fourth quarter 2017 results which paints the company in struggling situation. Mostly, however, they cited the fierce competition in drone manufacturing as the reason the Karma has failed.

The company was already forced to announce a price cut on December 10 for its core camera product, the HERO5, due to weak pre-holiday sales.

"Cutting costs is a good move, although now it's about if the company can turn this ship around themselves", Daniel Ives, analyst at GBH Insights, said.

GoPro is now also facing financial trouble, with the company laying off staff and reducing the salary of CEO Nicholas Woodman, to $1.

Other reports by GizPress

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