Published: Tue, January 09, 2018
Economy | By Shawn Conner

GoPro exits the drone business, confirms job cuts

GoPro exits the drone business, confirms job cuts

Shares of GoPro fell to an all time low of $5.04, down 33% in early trading.

GoPro, whose cameras and drones are mostly used by sports junkies and travel enthusiasts, cut the price of its latest Hero6 cameras to $399 from $499.

The company cited a hostile regulatory environment in the U.S. and Europe as well as an extremely competitive market as reasons for its departure.

GoPro is killing its drone business and slashing 20 percent of its staff after reporting weak demand for its products on Monday. Shares had already lost 13 percent in 2017. But the possibility of a sale prompted a modest recovery and the stock was down over 12.5 per cent at the end of trading.

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Woodman also said he will reduce his 2018 cash compensation to $1.

The Karma drone was supposed to help turn around GoPro's business when it was introduced in September 2016.

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.

The action camera maker planned to axe over 250 jobs, or one-fifth of its workforce, and would be wrapping up its drone business after suffering a sharp decline in sales throughout the fourth quarter.

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They also reported a "sharp increase in sell-through" after they slashed the price on December 10, adding that sell-through for the camera more than doubled in the two weeks after the price cut.

GoPro said it will sell through its remaining Karma inventory and will continue to provide service and support to Karma customers.

It entered the drone market in 2016 with its Karma device, which became the second best-selling drone in the United States a year ago after a relaunch. Fourth quarter revenue includes a negative impact of approximately Dollars 80 million for price protection on HERO6 Black, HERO5 Black and HERO5 Session cameras, as well as the Karma drone.

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