By David Clucas
It’s not been a good year for action-camera category leader GoPro (Nasdaq:GPRO).
Just when it looked like the brand could receive a boost from new products like its Hero5 cameras and Karma drones, plus better media editing/posting services, it’s hit hurdle after hurdle.
Production issues of its hardware have delayed inventory, including a recall of 2,500 Karma drones. Meanwhile, GoPro’s sales were sliced in half during the first half of the year, followed by a 39 percent drop in the third quarter, with profits swinging to losses. And on November 30, the company announced it will cut 15 percent of its workforce (about 200 full-time positions) in a restructuring that includes the closing of its entertainment division and the departure of its president Tony Bates by the end of the year.
The company-wide restructuring is designed to reduce full-year 2017 non-GAAP operating expenses to approximately $650 million (GAAP: $735 million) and achieve its goal of returning to non-GAAP profitability in 2017.
GoPro Founder and CEO Nicholas Woodman said the company will “sharply narrow its focus” to concentrate on its core business. “We are headed into 2017 with a powerful global brand, our best ever products ,and a clear roadmap for restored growth and profitability in 2017.”
Woodman sees the company as well positioned to present consumers with streamlined solutions to capture, edit and share video. Still, similar to slowing growth seen in the fitness tracking electronic market, investors worry a flood of cheap competition from Asia will continue to temper growth. And while category leaders like GoPro, FitBit and others have beefed up their products with more convenient digital services, there’s also a broader question of whether consumers are experiencing content fatigue.
Troubles aside, GoPro officials said its internal data show its Black Friday sales were “up 35 percent at leading U.S. retailers.” The final holiday sales report will largely answer the question of whether consumers still have an appetite for the product or have moved on to other technologies.
Either way, it’s likely acquisition rumors could heat up again for GoPro — something the company might be preparing for with the recent restructuring. But don’t necessarily expect the lowest bargain-basement price for GoPro, unless it hits a few more hurdles. This year’s bidding war over peer active-lifestyle tech brand Skullcandy — with a similar high rise and fall in the market — proved investors still see opportunity in the sector.
Photo courtesy GoPro
