GoPro says goodbye to 15 percent of its workers, cuts entertainment division

GoPro, the sports-action camera maker that surged in popularity due to the entertainment value of its innovative products, is admitting that it needs to do more than just entertain the masses.

Wednesday morning, GoPro said it would cut 15 percent of its workforce, or more than 200 jobs, cancel current open positions, and close down its entertainment division.

The San Mateo-based company said in a statement that the moves would reduce its operating expenses to about $650 million next year, and it would take a charge of between $24 million and $33 million related to the restructuring. Most of those charges are expected to be incurred during the fourth quarter of 2016.

It’s the second round of job cuts by GoPro this year. The company laid off 100 employees, or about 7 percent of its staff, in January.

Of all those leaving GoPro, no one is likely to stand out more than company president Tony Bates, who will step down by the end of the year. Bates has been with GoPro since 2014, and prior to joining the company, was an executive vice president at Microsoft and chief executive officer of Skype Technologies when Microsoft acquired it for $8.5 billion in 2011.

“Since they are shutting down the entertainment division entirely, it makes sense that a substantial portion of the reduction would be related to that division, although the company did not provide specifics,” said Nick McKay, an analyst with Wedbush Securities.

GoPro CEO Nick Woodman said the layoffs and shuttering of the entertainment business were necessary as the company is trying to streamline its operations, with an emphasis on the cameras and other hardware products that spurred its initial run of success.

“Consumer demand for GoPro is solid and we’ve sharply narrowed our focus to concentrate on our core business,” Woodman said in a statement. “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 buried the lead regarding its job-cut and restructuring announcement. The news came near the end of the first page of a press release the company titled “Solid Holiday Demand In The U.S. For GoPro Hero5.” GoPro said that during the week of Black Friday, sales of its cameras were up 35 percent from a year ago “at leading U.S. retailers,” and between Thanksgiving and Cyber Monday, sales of its cameras at its site rose 33 percent from last year.

A notable item missing from GoPro’s announcement was anything about its much ballyhooed Karma drone aircraft. After several delays, GoPro finally put the Karma on sale on Oct. 23, and then recalled the drone on Nov. 8 citing reports that several Karmas were losing power during flight and the $800 gadgets were falling out of the sky and crashing to the ground.

“We have not gotten an update on the Karma drone recall,” said Wedbush’s McKay. “I  think the over-arching goal with the Karma recall is that once the product hits shelves eventually there are no further recalls. We will have to wait and see on that.”

Investors showed their favor with GoPro’s moves Wednesday, sending the company’s shares up by almost 5 percent to $10.30. For the year, GoPro’s stock price has fallen by 43 percent.

Photo: GoPro CEO Nick Woodman celebrates his company’s IPO in New York on June 26, 2014. On Wednesday, GoPro said it would cut more than 200 jobs, or about 15 percent of its workforce. (Seth Wenig/AP)


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