GoPro is killing its drone business and slashing 20% of its staff after reporting weak demand for its products.
The drone remained the second most popular of its price class after the recall, GoPro said, but an "extremely competitive aerial market", as well as a "hostile regulatory environment" in Europe and the United States made the product's future "untenable". The company has 1,254 employees as of September 30, 2017, which will be reduced to "fewer than 1,000".
The company has lowered the guidance for its next-quarter earnings, and founder and CEO Nick Woodman has reduced his salary to $1 for 2018, according to the statement, although other non-cash compensation remains.More news: Golden Globes 2018: Stars take activists as dates on red carpet
GoPro initially put the Karma on sale in October 2016, but pulled it from the market after just 16 days.
Following a 25 percent plunge, GoPro Inc (NASDAQ: GPRO) sharply recovered Monday on news that it may be exploring a sale. That followed multiple reports of technical issues, which caused the drones to drop from the sky as they were flying. Mostly, however, they cited the fierce competition in drone manufacturing as the reason the Karma has failed. "GoPro will continue to provide service and support to Karma customers". So, for now, I think investors would do well to focus first on GoPro's underlying business rather than on the prospect of any potential acquisition premium. Some of GoPro's biggest competitors include DJI and AeroVironment.
GoPro is exploring a sale after a tumultuous couple of years that included multiple rounds of layoffs, shrinking sales, and a plummeting stock price.
Preliminary results show the company had fourth quarter revenue of $340 million, down $200 million, or 37% from what it reported in the fourth quarter a year earlier. Its new device, the Hero6 Black, has seen a price cut of $100, and you can likely expect more aggressive promotions and new cameras coming soon.