GoPro expects revenue slump, slashes workforce

GoPro expects revenue slump, slashes workforce

GoPro is existing the drone market, the company announced on Monday.

In an announcement to the market, the company said it has lowered the price of its premium model, HERO6 Black, from $US499 to $US399 "to align with its good, better, best product strategy". This is tough to see, especially for a company which was once a stock market darling - now practically all their business is still reliant on the segment of action cameras again, which is also heavily under pressure.

The company will also exit the drone business and stop manufacturing its Karma line of aerial drones. The company announced significant layoffs a few days ago: the layoffs will bring the workforce down to under 1000 and CEO Nicholas Woodman will take a paycut to $1 as the company struggles to get back on its financial feet. Following intense competition and low-profit margins, the company is finding it incredibly hard to make its drone business sustainable.

GoPro Chief Executive Officer Nick Woodman became the best-compensated USA executive for 2014, when his company went public.

While the company states although the Karma Drone saw success, there were multiple factors that lead to the final decision.

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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 USA made the product's future "untenable".

GoPro stock tanked after this morning's negative earnings preannouncement, but after the report that the company might be seeking a buyer, the shares bounced.

In particular, the company forecast its revenue will fall sharply by 37 per cent to $US340 million, which is far short of Wall Street estimates (of a more lofty $US472 million).

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. They have also said that the recent drone regulation changes that have occurred in the United Kingdom and US will mean that not as many people will be buying drones and this, combined with the competitive market, mean that the "aerial market is untenable" for GoPro. Six research analysts have rated the stock with a sell rating, thirteen have given a hold rating, two have issued a buy rating and one has given a strong buy rating to the company's stock.

"GoPro is committed to turning our business around in 2018", Woodman said in a statement.

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