GoPro Slashes Jobs And Axes Divisions Amid Growing HERO5 Sales
Solid sales of GoPro's newest action cameras may be warming the hearts of company execs this holiday season, but it's not enough to save the workforce from sizable job cuts. The GoPro HERO5, announced back in September as the camera firm's flagship model, has succeeded in turning around the slump in demand, the company said today. In fact, sales over the week including Black Friday suggest a 35-percent rise year-on-year in the US.
In the period covering Thanksgiving through Cyber Monday, meanwhile, sales were up 33-percent compared to the year before. The camera, priced at $399, shoots up to 4K resolution video along with 12-megapixel still images, while the design has integrated waterproofing for up to 33 feet of submersion. Most previous GoPro cameras required separate casings in order to resist water.
Nonetheless, GoPro says that even with the improvements in sales the company still needs to trim down. In an attempt to cut $650-735m in expenses from 2017's budget, there will be redundancies, cuts across various divisions, and a freeze on recruitment. Company president Tony Bates will step down at the end of 2016.
More than 200 full-time jobs are being lost at GoPro, while the company will also shutter its entertainment division. Facilities reductions will also be carried out, and all open positions the company is currently recruiting for will be cancelled. In total, GoPro expects to cut around 15-percent of its workforce with the redundancies.
That'll cost the firm as much as $33m in total, including $13-18m predominantly in severance costs, and $11-15m mostly in stock-based compensation expense and accelerated depreciation associated with consolidating GoPro's various offices. The bulk of those charges are expected to hit the Q4 2016 financial period. After that, it claims, a profitable 2017 should be a realistic goal.
"Consumer demand for GoPro is solid and we've sharply narrowed our focus to concentrate on our core business," Nicholas Woodman, founder and CEO of GoPro, said today of the changes. "We are headed into 2017 with a powerful global brand, our best ever products, and a clear roadmap for restored growth and profitability in 2017."
GoPro's struggle has, at least in part, been in trying to persuade existing owners of its action-focused cameras that they should upgrade to the latest-and-greatest model. That's proved a fairly tough sell, as did GoPro's cheaper HERO camera models which proved to be quickly discounted. The company has attempted to work itself into the 360-degree and virtual reality content space, with its Omni rig containing six cameras in total, though that's still a niche segment for the time being.
Meanwhile, GoPro's much-vaunted Karma drone has been stung with technical issues, in some cases falling out of the sky during use after power to the motors apparently failed. GoPro was forced to recall every unit sold, and recently announced it would attempt to repair its relationship with owners by giving them a free HERO5.