After being forced into price reductions during the holiday season due to weak demand, action camera maker GoPro has entered full turnaround mode.
In a release of preliminary results on Monday, the San Mateo, Calif-based company announced that it was cutting its global workforce by 250 people and exiting the drone business due to intense competition and “a hostile regulatory environment in Europe and the United States.”
In addition, Nicholas Woodman, the company’s founder and CEO, said he would be reducing his 2018 cash compensation to $1.
“GoPro is committed to turning our business around in 2018,” said Woodman. “We entered the new year with strong sell-through and are excited with our hardware and software roadmap. We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018.”
Preliminarily, GoPro expects revenue to be approximately $340 million for the fourth quarter of 2017, up slightly from $330 million in the prior quarter. That total includes a “negative impact” of $80 million for holiday price reductions on the HERO6 Black, HERO5 Black, and HERO5 Session cameras.
“Despite significant marketing support, we found consumers were reluctant to purchase the HERO5 Black at the same price it launched at one year earlier. Our December 10 holiday price reduction provided a sharp increase in sell-through,” said Woodman.
GoPro said initial uptake of its newly launched spherical camera, Fusion, was better than expected during the quarter.
The company will exit the drone market after selling off its remaining Karma Quadcopter inventory. GoPro said it will continue to provide service and support to Karma customers.
GoPro’s restructuring will result in an estimated aggregate charge of $23 million to $33 million, including as much as $18 million of cash expenditures from the workforce reduction. It will also book about $10 million to $15 million of non-cash charges. GoPro expects to recognize most of the restructuring charges in the first quarter of 2018.
GoPro ended the fourth quarter with cash and cash equivalents of $247 million, up $50 million over the third quarter of 2017.