GoPro’s production issue takes its toll on its quarterly revenues

GoPro said it has ramped up production to meet the demand from the upcoming holiday season. Its latest product offerings include the GoPro 5 and the world’s first consumer drone camera – the Karma.

Hurt by production issues for its latest products, GoPro Inc. has reported a much lower than expected quarterly revenue and missed key holiday forecasts set by analysts.

GoPro is seeing a fall in demand for its body-mounted point-of-view camera which are favoured by skydivers, surfers and other adreline-seeking junkies.

On Thursday, with the news of falling sales, the company’s shares have tumbled by nearly 20%.

Analysts view the company’s latest product offerings, including the Hero5 and the first consumer drone, the Karma, as instrumental for a turnaround of the company’s fortunes.

Production issues are however holding back deliveries and as per Nick Woodman, GpPro’s Chief Executive, they could hamper the company’s ability to meet demand in the crucial upcoming holiday sales season.

GoPro said it is ramping up production and distribution of the Hero 5. During mid-october, the company had said it had temporarily stopped selling the Hero 5 on, in the United States, while it negotiated prices.

As a result of the production issue, it has reported a net loss of $104.1 million in this quarter against a profit of $18.8 million last year. Excluding items, GoPro lost 60 cents per share, against an analysts’ estimates of 35 cents.

As per FactSet StreetAccount, a research firm, it has shipped 1.02 million products in the quarter as against an analysts’ estimate of 1.11 million.

The shares of Ambarella Inc. also fell by 3% in extended trading. Its video processing chips are used in GoPro cameras.

Similarly, Fitbit’s dismal revenue forecasts have also dimmed due to production issues.

Investors appear to be spooked by shares of consumer gadgets.

Including these losses, GoPro’s stock is down by nearly 33% this year.


Categories: Entrepreneurship, HR & Organization, Strategy


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