Economy

GoPro exits drone market and cuts jobs after poor 2017 earnings

GoPro exits drone market and cuts jobs after poor 2017 earnings

The San Mateo-based company, which had 1,254 emplyees as of September 30, is reducing that number to fewer than 1,000. To this we also have to add the recall of approximately 2'500 Karma drones - due to power loss operation - that happened back in November of 2016 and whatever implications it had on the brand value and product it self. But it said a hostile regulatory environment in Europe and the United States, and extremely competitive market, makes staying in the business untenable. The company's shares, which earlier dropped as much as 33 percent, pared some losses after the report, declining 11 percent to $6.67 at 1:55 p.m.in NY.

GoPro, whose cameras and drones are mostly used by sports junkies and travel enthusiasts, cut the price of its Hero6 cameras to US$399 from US$499 and said that would hurt revenue by around US$80 million in the current quarter.

GoPro confirmed during its quarterly earnings report today that the Karma is its first and last drone. However, the company had to recall all units in November previous year due to a battery issue that caused its drones to just fall out of the sky. The company has always been criticized by investors for failing to diversify its product line away from its action cameras, which cater mainly to extreme sports enthusiasts. Following Monday's windfall, GoPro short sellers have now made a total of $42.5 million betting against the company this year.

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"GoPro is committed to turning our business around in 2018", said Woodman in a statement. "There's significant demand for GoPro at the right price", Woodman said. On January 7, GoPro lowered the price of its premium model, HERO6 Black from Dollars 499 to USD 399.

Chief executive officer Nicholas Woodman will reduce his 2018 cash compensation to $1.

He hoped the actions would return the firm to profitability in the second half of 2018. The company will however continue to provide service and support to Karma customers.