08 Jan 2018 - 18:55
GoPro shares dive as it cuts staff, exits drone market
New York: Shares of GoPro plunged by about 25 percent Monday after it announced it was slashing its workforce and exiting the drone market following disappointing holiday-season sales.
The camera and technology company said it would cut its workforce of 1,254 to fewer than a thousand as it projected fourth-quarter sales of $340 million, well below the $474 million expected by analysts.
Midway through the holiday season, GoPro slashed prices on some camera models, which lifted sales but lowered profit margins, said chief executive Nicholas Woodman.
"Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier," said Woodman, adding that the company "is committed to turning our business around in 2018."
Woodman plans to take a salary of just $1 this year.
Although GoPro's Karma drone was the number two offering in its price division, the company will exit the "extremely competitive" drone market, it said.
"A hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead. These factors make the aerial market untenable," GoPro said.
GoPro will no longer market drones after it sells off remaining inventory, but will continue to provide services and support to Karma customers, it said.
Near 1520 GMT, shares of GoPro were down 25.9 percent at $5.57.