GoPro kills its Karma, exiting drone business

GoPro Karma Hero6

Just two years since it entered the drone segment, GoPro is throwing in the towel. The action camera giant’s only drone product–the Karma–is officially dead. The announcement is on the back of it cutting 20% of its workshop, the major portion from its aerial division.

The struggling Karma reached #2 market position in its price range in 2017, however, GoPro says “the product faces margin challenges in an extremely competitive aerial market.”

“Furthermore, a hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead. These factors make the aerial market untenable and GoPro will exit the market after selling its remaining Karma inventory. GoPro will continue to provide service and support to Karma customers.”

In its preliminary financial results for the fourth quarter ended 31 December 2017, GoPro expects a revenue of USD340 million, missing estimates of USD480 million. The company’s stock plunged 30 percent after the report.

The company ended the fourth quarter with cash and cash equivalents of USD247 million, up USD50 million over the third quarter of 2017.

GoPro said that there was a negative impact of about USD80 million for price protection on the HERO6 Black, HERO5 Black and HERO5 Session cameras, as well as the doomed Karma drone.

Sales of the HERO5 Black camera was lacklustre at the start of the holiday quarter, although a holiday price reduction in December saw a sharp increase in sell-through. Globally, the sell-through of HERO5 Black doubled after the price reduction, while HERO5 Session roughly tripled.

Separately, the flagship HERO6 Black performed as expected in the fourth quarter. On 7 January, GoPro lowered the price of the HERO6 Black from USD499 to USD399 as part of its “good, better, best” product strategy.

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Additionally, the newly launched spherical camera Fusion, enjoyed better than expected initial uptake during the quarter.

GoPro says it started the year with a strong sell-through and is excited about its hardware and software roadmap. Moving forward, it is also adopting a lower operating expense model to help it return to profitability and growth in the second half of 2018.

It is cutting its global workforce from 1,254 (as of 30 September 2017) to less than 1,000 worldwide.

Founder and CEO Nicholas Woodman will also reduce his 2018 cash compensation to USD1.

Source: GoPro

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