Bad Karma: GoPro slashes jobs, will exit its drone business

Gladys Abbott
January 9, 2018

CEO Nick Woodman said the plan is to remain independent, but "If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at".

The comments followed reports by several media outlets, including Reuters, that GoPro had hired JP Morgan to help it with a sale process, as the one-time Wall Street favourite battles falling demand for its sports cameras and drones.

If that weren't enough, GoPro also announced that it will exit the drone market after selling through its existing Karma drone inventory.

Furthermore, it forecasts that tough regulatory hurdles in Europe and the United States will likely reduce the market for drones in the years ahead.

CEO Nicholas Woodman will reduce his 2018 cash compensation to $1. GoPro had 1,254 employees as of September 30.

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While the Karma drone struggled from the beginning to reach the skies, with a number of failed release dates and an embarrassing recall after users reported drones losing power and dropping out of the sky, GoPro partly blamed drone regulations for their decision.

GoPro's shares recovered somewhat after the news of the possible sale, down 11.30% to $6.67 in mid-day trading on Monday. Mostly, however, they cited the fierce competition in drone manufacturing as the reason the Karma has failed. Some of GoPro's biggest competitors include DJI and AeroVironment. "GoPro will continue to provide service and support to Karma customers". "I think they made a strategic error in pursuing entry into such a competitive space, and it proves how hard consumer electronics innovation has become".

The company said it now expects sales of about $340 million, well short of its own previous projection of as much as $480 million and the average analyst estimate of $472 million.

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.

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