GoPro Misses Already Low Sales Estimates Amid Talks of Sale

(Bloomberg) -- GoPro Inc. reported disappointing sales in the fourth quarter, battered by a dismal holiday season and potentially hastening the likelihood of a sale.

The results for the once high-flying action-camera maker add to months of struggles to diversify revenue and drum up demand for existing products. In January GoPro lowered expectations significantly for fourth-quarter earnings after its Hero line of cameras failed to fill many stockings at Christmas. The company also ended its Karma drone line and said it would cut more than 20 percent of its global workforce.

GoPro reported revenue of $334.8 million in the fourth quarter, missing its revised projection of $340 million, which was already well short of its original estimates. Sales took an $80 million hit because of discounting of its Karma drones and Hero line of cameras over the holiday season, GoPro said in January. It also cut the price of its newest Hero6 camera by $100 to $399.

The shares fell 3.3 percent to $5.32 in extended trading after closing at $5.50. The stock is down almost 50 percent over the last 12 months.

GoPro lost $55.85 million in the three months ended Dec. 31, or 41 cents a share, compared with the average analyst estimate for a $66 million loss, or 44 cents a share. Excluding certain items, the loss was 30 cents, compared with estimates of 11 cents a share.

Time and time again, GoPro has tried to prove that it’s more than just a one-trick-pony, betting on the Karma drone to turn around the business when it rolled out in September 2016. Instead, it was beset by production delays, battery issues that forced a product recall, and stiff competition from China’s SZ DJI Technology Co., the world’s biggest drone maker. GoPro earns almost all of its revenue from its cameras and accessories, although it’s tried to produce recurring fees from software services.

"It appears that camera launches have failed to consistently induce existing customers to replace, or to bring in new customers in the face of a variety of competing products, namely from high-priced and high-powered smart phones," Alicia Reese, analyst at Wedbush Securities Inc., wrote in a note before the earnings announcement.

Last month, the company expanded benefits for the "Plus" subscription, which costs $4.99 a month, including replacement for damaged cameras, mobile cloud backup, and greater storage capacity. This is the first of several initiatives planned for subscribers in 2018, the company said in its earnings statement.

GoPro Inc. hired investment bank JPMorgan Chase & Co. to advise on a potential sale, Bloomberg News reported last month. Once valued at more than $10 billion, GoPro’s market capitalization has fallen to less than $1 billion. A buyer could leverage GoPro’s brand and gain profit contributions from device sales, analysts said.

GoPro didn’t provide forecasts on first-quarter or full-year earnings as it has done in the past. For the first quarter, analysts are looking for revenue of $201.3 million and adjusted losses of 25 cents a share.

To contact the reporter on this story: Selina Wang in San Francisco at swang533@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Andrew Pollack

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