Shares of GoPro Inc (NASDAQ:GPRO) are up 2.54 percent during early afternoon trading today, after the company told shareholders that it plans on laying off 15 percent of its employees – a bombshell announcement that was hidden in a press release entitled “Solid Holiday Demand In The U.S. For GoPro HERO5.” The company, which makes and sells popular high-tech action cameras, also announced the upcoming departure of its President.
The HERO5 is, in fact, a successful product, as it has been the top selling digital imaging device in the country since it became available on October 2.
“We have a lot of work to do to finish the quarter and our fiscal year, however our HERO5 cameras have been very well-received by critics and consumers alike,” said Nicholas Woodman, GoPro’s Founder & Chief Executive Officer. “Both HERO5 cameras can now auto-offload new content to the cloud and our Quik mobile app makes accessing and editing your footage fun. Its clear consumers are excited about these new features.”
The company also told investors how well they did during the holiday shopping weekend. On Black Friday, GoPro’s camera unit sales grew 35 percent compared to data from last year. Sales on Cyber Monday – the busiest online shopping day of the year – grew 33 percent year-over-year.
GoPro also announced a new restructuring program that it says will cut full-year 2017 non-GAAP operating expenses to about $650 million – and reach its target of returning to non-GAAP profitability during fiscal 2017. As part of the restructuring, the company plans on shutting down its entertainment division, reducing its facilities and slash over 200 full-time employees. Some open employment positions will also be cancelled – for a total workforce reduction of 15 percent.
The restructuring plan will generate total charges in the range of $24 million to $33 million. Between $13 million and $18 million will be spent on the lay offs – essentially all of which are severance packages. The remaining $11 million to $15 million will be non-cash spending, mostly of stock-based compensation and office consolidations.
The majority of costs incurred due to the restructuring will be charged during the fourth quarter of the current fiscal year. GoPro announced a similar workforce reduction back in January, when it cut 100 people from its payroll – about seven percent of its total workforce.
GoPro also announced in its press release this morning that its President, Tony Bates, plans on stepping down from his position by the year’s end. The soon-to-be former President was once an executive for both Microsoft (NASDAQ:MSFT) and Skype. Mr. Bates called his time at GoPro an “incredible experience,” adding that he is leaving the company with a solid management team that is “deeply focused on its core business and profitability.”
The company has been centering its activities on restoring profitability by focusing on its core business, while ditching some of the less successful parts of its operations. GoPro, which was first listed on the NASDAQ in 2014, has seen its share price sink by about 60 percent since it went public – including 45 percent this year alone.
GoPro’s sales have been declining for four quarters in a row. Its helmet-mounted and body-mounted cameras have recently come up against cheaper competitors – as well as smartphones with increasingly high-tech cameras.
The company’s sales are also likely to be negatively impacted by a recall of its Karma product, GoPro’s first-ever drone. The $799 flying devices can suddenly lose power unexpectedly – and mid-flight. All 2,500 of the units sold since the product’s launch on October 23 were recalled beginning on November 8.
“Consumer demand for GoPro is solid and we’ve sharply narrowed our focus to concentrate on our core business,” the company’s CEO concluded in the press release. “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.”
The author holds no positions in the above mentioned companies.