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GoPro camera maker cuts jobs again in search of profit
[NEW YORK] GoPro Inc unveiled a second round of job cuts to reduce costs in the face of growing skepticism from Wall Street that the action-camera maker can return to growth and make a profit.
The company said Wednesday it's eliminating about 270 full-time and open positions. In late November, it chopped 15 per cent of its workforce and shut down its entertainment division. GoPro had 1,552 employees at the end of 2016, according to a regulatory filing.
The latest cuts are expected to reduce full-year adjusted operating expenses to less than US$495 million. That's about 18 per cent below the company's previous projection of US$600 million. The stock jumped as much as 12 per cent in extended trading, following the news.
GoPro has gone from a high-flying gadget maker with digital media potential to a bloated company being undercut by cheaper Asian rivals. It reported disappointing earnings last quarter, was forced to recall its Karma drone in November, and was hit with production delays that dented sales.
CJ Prober, who became Chief Operating Officer in January, vowed to keep costs in check, make GoPro cameras easier to use, and chase international growth.
"We're trying to do fewer things better," Mr Prober said in an interview on Wednesday.
"We went team by team and did detailed budget and organisational reviews. That fed into a series of decisions that let us get to that operating expenses number."
Roles were cut throughout the organisation, he said. The company is ridding itself of "distractions," like the entertainment unit, and tightening team structures, he added. GoPro shrank its video production team to focus more on user-generated content and less on GoPro-created videos. The company also merged teams internationally where there were duplicate roles across regions. Mr Prober said the cuts will not impact the company's product road map.
GoPro expects up to US$10 million in restructuring costs in the first quarter, and forecast first-quarter revenue toward the upper end of its guidance range of between US$190 million to US$210 million. The company said it has no need to draw on its credit facility and expects to make a profit this year, before interest, tax, depreciation and amortisation.
Several analysts downgraded GoPro recently, sending the stock to a record new lows. The shares are down about 70 per cent from the company's 2014 initial public offering price.
Goldman Sachs Group Inc and Citigroup Global Markets Inc cut the stock to sell, citing execution problems and stagnant growth in a saturated market. On Monday, Cleveland Research analyst Ben Bollin wrote that GoPro's sales momentum is "challenging", with trends worsening through the quarter. The reintroduction of the Karma drone has been disappointing, the analyst also said.