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GoPro shares slide after missing Q4 forecasts

Published February 3, 2016

SAN MATEO, Calif. (BRAIN) — Shares of GoPro plunged in after-hours trading Wednesday after the action camera maker reported a surprising fourth-quarter loss of $11.4 million, or 8 cents a share, compared with a year-earlier profit of $144.9 million. Wall Street analysts had expected the company to break even during the quarter.

GoPro also warned of continued weakness in the first quarter of 2016 and announced that CFO Jack Lazar is retiring in March after two years with the company and will be replaced by Brian McGee, a 30-year finance industry veteran who joined GoPro from Qualcomm last year.

Fourth-quarter revenue totaled $436.6 million, slightly higher than GoPro’s updated forecast of $435 million announced in January but well off of previous guidance of $500 million to $550 million.

After pricing its compact Hero4 Session camera at $400 last summer, GoPro has twice reduced the price — currently at $199 — and took a $21 million charge during the quarter due to the second price cut, enacted in December. It also recorded a charge of $57 million due to excess inventory and obsolete tooling as GoPro discontinues certain models and simplifies its line to a “good, better and best” offering of the Hero4 Session, Hero4 Silver and Hero4 Black, respectively.

During an earnings call, CEO Nick Woodman attempted to put a bright face on the numbers, saying Q4 2015 was the second-highest-grossing quarter in GoPro history and that full-year revenue rose 16 percent to $1.62 billion for an annual profit of $111.6 million, or 76 cents per share.

He also noted that the Hero4 Session price cut sparked a threefold increase in sell-through in December, and that the camera is “clearly resonating with consumers.” Overall, GoPro shipped 6.6 million cameras during 2015, up 27 percent from 2014, the company stated.

Additionally, Woodman addressed analyst concerns that GoPro is straining under competitive threats by highlighting NPD Group data stating that in the fourth quarter, the brand captured 21.3 percent of the combined digital camera/camcorder category in the U.S. and commanded more than 85 percent of the action camera market.

“While we respect our competitors, the data shows they are not having a significant impact on our business,” he said.

Still, Woodman acknowledged that growth slowed significantly during the second half of 2015 and that GoPro needs to develop software to make it easier for consumers to offload and edit their GoPro content. After reducing its workforce by 7 percent in January, the company has reallocated resources to software development and will introduce a new content management system in March, Woodman said.

Before Wednesday’s earnings announcement, GoPro shares closed at $10.71, off 84 percent from a 52-week high of $65.49. The shares fell as much as 16 percent in after-hours trading following the announcement.

GoPro’s stock is traded on the Nasdaq exchange under the GPRO symbol. Its stock performance is tracked on BRAIN's stock page

 

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