GoPro to exit the drone business, plans to cut workforce by 20%

GoPro is considering to sell the company after weak holiday sales.

GoPro cuts staff, considers selling company after weak holiday sales (REUTERS)

All is not well with GoPro as the company announced on Monday it will cut more than 20% of its staff and signaled it was willing to consider a sale following weak holiday-season sales. GoPro also plans to exit the drone business and chief Nicholas Woodman will accept a salary of just $1 this year.

The company's share price plummeted amid the disappointing reports. The camera and technology company said it would cut its workforce of 1,254 to fewer than a thousand.

A source told AFP that GoPro hired JPMorgan Chase to advise it on strategic options, including a possible sale. Woodman earlier told CNBC that the company expected to remain independent, but would consider a sale.

"If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at," Woodman told CNBC.

"Of course we need to run the business as though we're going to be independent, and we're planning accordingly."

GoPro projected fourth-quarter sales of $340 million, well below the $474 million expected by analysts. Midway through the holiday season, GoPro slashed prices on some camera models, which lifted sales but lowered profit margins.

"Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier," said Woodman, adding that the company "is committed to turning our business around in 2018."

And although GoPro's Karma drone was the number two offering in its price division, the company will exit the "extremely competitive" drone market, it said.

"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," GoPro said.