In a statement today, GoPro announced that it's killing off its drone division and laying off 20 percent of its workforce. GoPro executed a mass recall, but then came the DJI's Mavic Pro which completely defeated Karma in nearly every aspect, at a lower price point. Also, Director Anthony John Bates sold 17,023 shares of the company's stock in a transaction on Wednesday, December 6th.
The company said it would reduce its headcount to fewer than 1,000, from 1,254.
The struggling GoPro Karma drone is also being put out of its misery, leaving the Chinese juggernaut DJI with one less major competitor in the market it dominates. The company's stock (GPRO) plunged almost 30 percent in response to the announcement. The company did attempt to get into the drone business with the release of Karma but due to a series of issues where the drone would crash mid-flight amongst other problems eventually forced it to get out of the business. The company admitted in its preliminary fourth-quarter results (2017) that it was facing financial troubles as it declared that it would lay off staff and would even cut the CEO's salary to cover up for the losses.
The drone remained the second most popular of its price class after the recall, GoPro said, but an "extremely competitive aerial market", as well as a "hostile regulatory environment" in Europe and the United States made the product's future "untenable". After $0.09 actual earnings per share reported by GoPro, Inc. for the previous quarter, Wall Street now forecasts 277.78% EPS growth.
GoPro also announced that Woodman would reduce his 2018 cash compensation to $1.
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GoPro will continue to provide service and support to Karma customer but after selling its remaining Karma inventory, they will exit the drone market.
"GoPro is committed to turning our business around in 2018", the founder and CEO says. With the Karma drone no more, it would make sense for them to redouble their efforts on making camera sales great again.
According to Woodman, GoPro's new hardware and software plans, coupled with lower operation expenses should allow the company to be profitable again.
For now, the company seems to be working hard on its action cameras, and we can expect to see some more price cuts on the Hero series.