GoPro Inc. attempted to polish some significantly bad news with “smoke and mirrors” statistics regarding their Black Friday sales. Comparing this year’s results, where they had a brand new Hero5 product with last year’s sales figures, where they had no new products, GoPro claimed their “Black Friday camera unit sales were up more than 35% year-over-year at leading U.S. retailers.” However, once the puff of magic accounting dissipated, the real news was dispatched: layoffs and the sudden departure of President, Tony Bates.
“We have a lot of work to do to finish the quarter and our fiscal year, however our HERO5 cameras have been very well-received by critics and consumers alike,” said Nicholas Woodman, Founder & CEO of GoPro. “Both HERO5 cameras can now auto-offload new content to the cloud and our Quik mobile app makes accessing and editing your footage fun. It’s clear consumers are excited about these new features.”
Not really…
Their new drone, the Bad Karma, which they overly-hyped for months, was instantly overshadowed by DJI’s Mavic when GoPro trotted it out. Then, the Karma abruptly soiled its pants and GoPro was forced to suddenly recall all models in the market and suspend sales just prior to the holiday season. Bad. Very bad.
Now comes word that GoPro is engaging in a company-wide restructuring that will reduce full-year 2017 non-GAAP operating expenses to approximately $650 million and achieve its goal of returning to non-GAAP profitability in 2017. Meaning about 15 percent of its workforce will be issued pink slips. Quite a nice stocking stuffer from Santa Woodman.
Tony Bates, who got the boot due to the Karma fiasco, issued this distorted reality to the press: “My time at GoPro has been an incredible experience,” said Tony Bates. “In the past three years, GoPro has seen enormous progress in camera technology, software and international growth. Today GoPro has a solid leadership team deeply focused on its core business and profitability.”
GoPro estimates that it will incur total aggregate charges of approximately $24 million to $33 million for the restructuring, including approximately $13 million to $18 million of cash expenditures as a result of the workforce restructuring, substantially all of which are severance costs, and approximately $11 million to $15 million of non-cash expenditures, consisting primarily of stock-based compensation expense and accelerated depreciation associated with office consolidations.
Nicholas Woodman, who clearly got an early start to California’s legalization of marijuana, stated, “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.” The truth is that Woodman’s company took an anemic step forward with the Karma and then two HUGE steps back – significantly damaging the brand currency it spent years cultivating. GoPro missed its opportunity to be a force in the personal drone market, missed its opportunity for an entry in the budding 360° VR camera market and now faces the reality where it’s brand no longer has the cache it once had in the extreme sports arena.
