Slashing 200 positions
GoPro (GPRO) has embarked on a restructuring process that will see 15% of its current workforce eliminated, meaning the company is ready to do away with ~200 positions. The move comes as GoPro has struggled with its attempts to expand outside its action camera mainstay.
The layoffs signal that GoPro is beginning to narrow its focus to profitable operations as it exits troubled businesses. The company has seen its losses swell in the recent quarters as it attempted to expand into media and drone businesses. The layoffs, closing of entertainment unit and other restructuring measures are expected to eliminate ~650 million from GoPro’s adjusted operating expenses in 2017.
Camera business has bright spots
Several analysts have recently said that GoPro could end its troubles if it could only focus more on building its action camera business, which seems to have bright prospects. GoPro Chief Executive Officer Nick Woodman has also repeatedly said demand remains strong for their cameras and the challenge they are facing is meeting production targets this holiday season.
The holiday season has kicked off strongly for GoPro as the company said Black Friday sales rose 35% over sales during the same period last year.
Although GoPro’s attempts to diversify its revenue streams have largely hit a snag, the company’s motive in making the moves was notable. It realized that standalone cameras were facing stiff competition from multipurpose smartphones such as those sold by Samsung (SSNLF), Apple (AAPL), and Alphabet (GOOGL), which are coming without with more powerful cameras.
As smartphone companies improve the camera capabilities in their products, standalone camera manufacturers such as GoPro, Canon (CAJ), and Nikon (NINOY) are struggling to defend their market share.
Besides the layoff of 15% of its employees, GoPro President Tony Bates, who has been tapped to lead the company’s media business, is set to leave.