Economy

GoPro quits the drone business, slashes staff

GoPro quits the drone business, slashes staff

In its statement today, GoPro also cited the hard regulatory regimes in the USA and Europe as the reason why it doesn't think the drone market will be lucrative in the long term. It will exit the market after selling its remaining inventory and continue to service existing drones. 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.

Founder and CEO Nicholas Woodman, a U.C. San Diego graduate, also said Monday he would cut his annual pay to $1.

The comments followed reports by several media outlets, including Reuters, that GoPro had hired JP Morgan to help it with a sale process, as the one-time Wall Street favourite battles falling demand for its sports cameras and drones.

The company will reduce its employees from 1,254 to fewer than 1,000, according to the corporate statement. Shares lost 96 cents, or 12.8 percent, to close Monday at $6.56.

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While the Karma drone struggled from the beginning to reach the skies, with a number of failed release dates and an embarrassing recall after users reported drones losing power and dropping out of the sky, GoPro partly blamed drone regulations for their decision.

"Drones are a competitive space", Pachter said.

Michael Pachter, of Wedbush Securities, said GoPro became a victim of both hubris and desperation as it tried to make a go of it in the drone sector. GoPro put the Karma back on sale in February 2017. In the months that GoPro was dealing with the, uh, fallout from the Karma's problems, DJI released two new smaller and cheaper drones that essentially made the Karma obsolete.

The company said it saw lower than expected revenue in the fourth quarter of 2017. A buyer could leverage GoPro's brand and gain profit contributions from device sales, analysts said. GoPro has also cut the price of the Hero6 Black camera from $499 to $399 to improve sales.