GoPro drops drones as sales plunge

GoPro drops drones as sales plunge

Troy Powers
January 9, 2018

GoPro announced Monday it would eliminate its Karma drone business and lay off 20 percent of its workforce.

The company is cutting more than 250 staff from its workforce, which numbered more than 1,250 at the end of September.

Camera-maker GoPro said it is getting out of the drone business following "hostile" regulations in the U.S. and Europe.

Chief Executive Nick Woodman also said he would cut his cash compensation for 2018 to $1. GoPro said low margins and a hostile regulatory market in Europe and the US makes the drone market "untenable".

All the bad news from GoPro slammed the company's shares Monday, as GoPro's stock price fell 21 percent to $5.95. That shaved $80 million from expected fourth quarter revenue, which the company now estimates will total $340 million, falling short of the $472 million expected by analysts.

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The Karma drone was first unveiled in late 2016, but at $799 struggled to compete on both price and reliability with its rivals, such as DJI.

Action camera maker GoPro is exiting the consumer drone market and slashing 254 after issuing a sales warning.

All Karma units were recalled in November that year after a fault was found that caused the machine to lose power. 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.

GoPro's potential sale inspired a mid-day rally in the stock, which plunged earlier on preliminary fourth-quarter figures.

"GoPro is committed to turning our business around in 2018", said Woodman in a statement. "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". On January 7, GoPro lowered the price of its premium model, HERO6 Black from Dollars 499 to USD 399. "GoPro will continue to provide service and support to Karma customers".