(Reuters) – GoPro Inc on Monday said it expects lower fourth-quarter revenue, hit by weaker demand for cameras in the holiday season and plans to exit the drone business, sending its shares to a record low.
The company, once a Wall-Street favorite, has seen a decline in demand for its cameras and Karma drones for several quarters, and plans to cut more than 250 jobs as it restructures.
It will take charges of $23 million to $33 million in the current first quarter.
Shares of the company, which were earlier halted, fell as much as 33 percent to a record low of $5.04.
The company said the move to exit the drone business will take place after selling the existing Karma inventory, as tough regulatory hurdles in Europe and the United States will likely reduce the market for drones in the years ahead.
GoPro, whose cameras and drones are mostly used by sports junkies and travel enthusiasts, cut the price of its latest Hero6 cameras to $399 from $499. It said the decision would hurt revenue by around $80 million in the fourth quarter.
Morgan Stanley said in a research note Monday that the price cut for the Hero6 camera would make earnings growth difficult in fiscal 2018.
The company’s chief executive also said it saw softer demand for existing camera models.
“Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier,” Chief Executive Nicholas Woodman said in a statement.
The company now expects fourth-quarter revenue of $340 million, compared with its November projection of $470 million, plus or minus $10 million.
“Cutting costs is a good move, although now it’s about if the company can turn this ship around themselves or ultimately they get consummated by a larger tech player,” Daniel Ives, analyst at GBH Insights, said.
Woodman will also reduce his 2018 cash compensation to $1, the company said.
Reporting by Laharee Chatterjee in Bengaluru; Editing by Savio D’Souza, Bernard Orr