GoPro is set to cut more than 20 percent of its global workforce whilst putting an end to its drone business after a disappointing fourth quarter in 2017.
GoPro said its now expecting sales of about $340 million (approximately R4,3 billion), well short of its original target, which was around $480 million (approximately R6 billion). Revenue took an $80 million (approximately R1 billion) hit due to discounting for its Karma drones, as well as its Hero line of cameras during the festive season.
GoPro saw a 33 percent decline in stock on Monday, dropping to $5.04 (R 65), its biggest ever drop and its lowest price since going public in 2014.
GoPro has been facing intensifying competition in the action camera market, as big tech companies from Samsung Electronics to Google have started selling very similar products.
GoPro’s Karma drone was expected to assist in turning around the business when it was launched in September 2016. However, it’s been plagued by problems from production delays to a recall of 2,500 units due to a battery issue.
The Karma also had tough competition, going up against China’s SZ DJI Technology, the biggest drone-maker in the world. GoPro has stated that low margins and a hostile regulatory market in Europe and the US makes the drone market “untenable.” It will be exiting the drone market after selling its remaining inventory and continue to service existing drones.
Chief Operating Officer Charles Prober is also leaving the company next month.
GoPro is cutting more than 250 jobs, reducing its workforce to fewer than 1,000 people. These job cuts and business restructuring will result in an estimated charge of $23 to $33 million (approximately R 285 million to R 410 million), most of which will be recognized in the first quarter of 2018.