GoPro to exit drone business, cites regulatory concerns; lay off 20 percent of workforce
Video: Domino's DRU drone carries pizza over a long distance
GoPro said it will exit the drone business citing a "hostile regulatory environment" for the foreseeable future and lay off more than 20 percent of its workforce as it cuts cost after a big revenue miss.
The company, which has struggled since going public in 2014, said its revenue for the fourth quarter will be $340 million, well below analysts estimates of $472 million.
GoPro launched as a camera maker, tried its hand at content, and evolved to improve its software platform. However, GoPro has struggled to maintain profit margins over time. The exit of the drone market is likely to hurt future growth.
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According to GoPro, its Karma drone was No. 2 in the market for its price, but the competition is fierce. The company noted in a statement:
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 and GoPro will exit the market after selling its remaining Karma inventory. GoPro will continue to provide service and support to Karma customers.
The company said its fourth quarter revenue was hit by about $80 million amid price competition on its HERO6 Black, HERO5 Black and HERO5 Session cameras, and its Karma drone. GoPro said it saw soft sales for its HERO5 Black camera and cut prices on Dec. 10. HERO6 Black camera sales were about on target, the company said.
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Other moves include:
- GoPro is looking to have fewer than 1,000 employees from the 1,254 it had as of Sept. 30.
- GoPro CEO Nicholas Woodman will take a 2018 cash salary of $1.
- The company sill take a charge of $23 million to $33 million to restructure its business. Most of the charges will appear in the first quarter.
GoPro said it will provide more details on its outlook when it reports fourth quarter earnings in February.