GoPro recalls thousands of Karma drones on reports of power failure
New York
GOPRO Inc's holiday sales season, already projected to be disappointing, just got even bleaker.
The company said it's recalling about 2,500 of its new Karma drones bought since Oct 23 after a small number of the devices lost power during operation.
Just last week, GoPro lowered its forecast for full-year sales and missed analysts' estimates for revenue in the third quarter. Shares fell as much as 8 per cent to US$10 in extended trading after plunging almost 40 per cent this year.
The company said no injuries or property damage have been reported involving the new drones.
GoPro, known for its cube-shaped action cameras, said owners can return the units for a full refund. Replacements aren't being offered, the company said on Tuesday.
GoPro said it's working with the US Consumer Product Safety Commission and the Federal Aviation Administration on the recall and plans to resume selling Karma drones as soon as it resolves the issues.
GoPro chief executive officer Nick Woodman has been betting on the new drone to spark growth, but the company's lower revenue projection suggested the devices won't be the consumer hit it was expecting. The recall may further depress sales.
Investors were banking on GoPro's newest camera - the Hero5 - and the Karma to bolster recovery of the company. Yet in the most recent earnings call, management said Hero5 sales may suffer from production issues.
Now, investors have the drone to worry about as well, according to Jitendra Waral, an analyst at Bloomberg Intelligence.
"The two pillars of GoPro's growth story are shaking," Mr Waral said on Tuesday. "There were a lot of built-up expectations around the recovery of the company with drones, so this is not a good start."
San Mateo, California-based GoPro is up against intense competition in the drone business, including manufacturing giant SZ DJI Technology Co and other upstarts flooding the market with cheaper models.
Shenzhen, China-based DJI has been developing its drones for almost a decade, and has built a robust support and repair system for drones, according to Colin Snow, the founder of Skylogic Research.
"It took DJI a long time to come up with these support systems," Mr Snow said in an interview recently. "I think GoPro is going to be surprised at how much support they have to do." BLOOMBERG
