GoPro to cut 7% of workforce on poor sales as entertainment chief departs
It was a bleak day for action cam maker GoPro, as the company said it planned to axe about 7 percent of its workforce on lower than expected fourth quarter sales, an announcement that sent shares tumbling.
GoPro expects quarter four 2015 revenue to come in at $435 million with non-GAAP gross margins set between 34.5 and 35.5 percent. The number is lower than analyst projections of approximately $511 million, reports Bloomberg. The company expects to bring in $1.6 billion for the year.
Contributing to last quarter's poor performance was the underwhelming launch of GoPro's Hero4 Session, a shrunken and stripped-down version of the company's popular Hero cameras. The device's small size came at hefty premium -- costing as much as a Hero4 Silver but with fewer features -- that didn't sit well with consumers.
After just three months on the market, GoPro slashed Session pricing by $100, later trimming another $100 off list before the holidays. GoPro is eating a $21 million charge as a result of this drastic price reduction.
GoPro is in the process of restructuring and will cut 7 percent of its current workforce to "better align resources to key growth initiatives." The company said its employee headcount has ballooned by 50 percent annually over the past two years and now stands at more than 1,500 people. Restructuring efforts will ultimately cost the company between $5 million to $10 million in the first quarter of 2016, with much of that sum going to severance pay, GoPro said.
Aside from GoPro's sour financials, SVP of Entertainment Zander Lurie is departing to replace former Hewlett-Packard executive Bill Veghte as CEO of survey firm SurveyMonkey, Re/code reports. Both Lurie and Veghte will take seats on the boards of the companies they are leaving.
Today's news sent GoPro stock prices tumbling. At the time of this writing shares were down 25 percent in after hours trading and well below its $24 IPO price, sitting at $11.02 after closing the day at $14.61. As Bloomberg notes, GoPro shares plummeted 72 percent over the course of 2015, shedding nearly $10 billion off the company's market value from a high of almost $12 billion in October 2014.
GoPro expects quarter four 2015 revenue to come in at $435 million with non-GAAP gross margins set between 34.5 and 35.5 percent. The number is lower than analyst projections of approximately $511 million, reports Bloomberg. The company expects to bring in $1.6 billion for the year.
Contributing to last quarter's poor performance was the underwhelming launch of GoPro's Hero4 Session, a shrunken and stripped-down version of the company's popular Hero cameras. The device's small size came at hefty premium -- costing as much as a Hero4 Silver but with fewer features -- that didn't sit well with consumers.
After just three months on the market, GoPro slashed Session pricing by $100, later trimming another $100 off list before the holidays. GoPro is eating a $21 million charge as a result of this drastic price reduction.
GoPro is in the process of restructuring and will cut 7 percent of its current workforce to "better align resources to key growth initiatives." The company said its employee headcount has ballooned by 50 percent annually over the past two years and now stands at more than 1,500 people. Restructuring efforts will ultimately cost the company between $5 million to $10 million in the first quarter of 2016, with much of that sum going to severance pay, GoPro said.
Aside from GoPro's sour financials, SVP of Entertainment Zander Lurie is departing to replace former Hewlett-Packard executive Bill Veghte as CEO of survey firm SurveyMonkey, Re/code reports. Both Lurie and Veghte will take seats on the boards of the companies they are leaving.
Today's news sent GoPro stock prices tumbling. At the time of this writing shares were down 25 percent in after hours trading and well below its $24 IPO price, sitting at $11.02 after closing the day at $14.61. As Bloomberg notes, GoPro shares plummeted 72 percent over the course of 2015, shedding nearly $10 billion off the company's market value from a high of almost $12 billion in October 2014.
Comments
Why don't you go join in with the rest of the Apple investors and buy up to $130, then short it all the way back to 90? It's a great stock to ride that train with and you make profit both ways.
I swear to god that's all wall street is doing.
Oh wait... everybody makes an iOS app
You'd said the god damn same 3 years ago and lost a hell of a lot of money not going for Apple, so now what?
You feel smug for being like a stopped clock (well maybe not, well see on the 26th...)/
Does expectation of going bankrupt factor into that PE.. That should crimp growth a tad hey.... But, no.....
Stock Price is supposed to reflect present value of the whole stream of projected future earnings at a rate of return X
(Rate of return X low, would means PE is low). Of course this is a shorthand since, X is not fixed for a company.
Going beyond 4 years usually is way speculative for a tech firm.
So you got total guesswork beyond 4 years and good numbers for the first 2.
The bridge in between would give you a pretty large margin of error.
So, PE and stock price is not very precise for most tech firms; there is so much guess and gut in there that basing it on reason makes no sense.
This huge "?" leaves a lot of place to manipulation and "creativity" and bull shit.
Even by those measures, reality makes some PE IMPOSSIBLE, yet they're allowed to exist.
Amazon cannot, whatever it does, reach the profit needed to justify a PE of 1000. There is no way. Simple as that.
So, WTH are these expectations built on? Or are they built on nothing and people on Wall Street are just shuffling paper around with assigned value to it and don't really care what's underneat as long as it sells.
PE and stock price these days doesn't reflect future growth of company,
but very short term expectations of movement in the stock.
One of the most important aspects of a camera is that its view is 'undistorted'.
Maybe they should think on that one.
No surprise here, I knew this was coming, Go-pro has a finite market of users, yeah they try and make it appeal to the generally user but most people do not need what their product can do. It like point and shot Digital camera's they got whipped out by the cell phone, and now that a cell phone can do 4K video it going to whip our those low end to medium end video product on the market. I remember the day of carrying around my Video camera, and my SLR camera, along with a computer and a cell phone, I only carry around my cell phone, and when I really want to take good pictures do I pull out me expensive DSLR. I never put money into high end video since was always a still image person.
This why I thought it was stupid when rumors were about apple buying Go-pro, apple knows that everyone does not want or need a go-pro product. Apple is focusing on product 90 of the world needs and wants and only those who are willing to spend money on those things they need and want.
What? Did someone just teach you what a P/E is and you think higher = better?
What's wrong with Apple's being 7?
These sort of personal attacks are not appreciated.
GoPro was brilliant at finding a new market within a declining one (point-and-shoot cameras) and differentiating it enough from a cell phone camera to be successful. All of the major photo manufacturers missed this (some have put out some waterproof point-and-shoots and Nikon just announced a 360-degree action camera, but overall, they missed the action market). Like Apple, GoPro was also brilliant at developing an eco-system for their camera. Go to any photo store and look at the amazing amount of accessories available from both GoPro and third-party companies that support the GoPro system. Amazing.
But there's also a few problems: a) the cameras are not intuitive to use. I looked at one my nephew had and without instructions, I couldn't figure out how to use it. And I'm a photographer and a techie. b) the latest camera was apparently a disaster c) absurd expectations for a niche product.
But in the end, I still think they'll do well unless someone comes out with just as good a product for a much lower price.
I told you people like you been saying the same CRAP for 4 years running with the exact same argument to justify that PE.
Even though Apple 3 years ago had 120B dollars coming in the next 3 years, massively more growth, more of everything than all the higher PE companies.
So, find some other argument BUD; argue your low PE point without spouting some mantra that's explains nothing because there are a hundred counter-arguments to it.
As an example of how clueless some folks are and how little they care about their money, I just watched a GoPro Session go for $225 plus another $15 shipping on eBay. $240 total. Apparently the buyer never bothered to check the current list price from GoPro: $199
LOL! Some bargain.