GoPro forecasts revenue below estimates, names new CFO

A year ago, the company reported adjusted profit of 99 cents a share and revenue of $634 million.

Shares plunged in after-market trades that followed release of the earnings report, but regained some ground to be down about 10 per cent to US$9.62 shortly after 2400 GMT.

GoPro had a less-than-spectacular quarter at the end of 2015.

Citigroup Inc. reiterated their hold rating on shares of GoPro Inc (NASDAQ:GPRO) in a research note published on Monday, AnalystRatings.Net reports. Despite decent top-line growth, high operating expenses dragged down earnings for the full year as well.

During the last quarter, GoPro cut the price of its new Hero4 Session model, raising analysts’ eyebrows and prompting a downgrade on the stock from Morgan Stanley. Looking into this year, the company is preparing to launch its first drone, the Karma quadcopter. Revenues were hurt as demand for GoPro’s Hero gadgets started to shrink in a competitive, saturating market.

“We were expecting bad and we got worse”, said Charlie Anderson, an analyst at Dougherty & Co. The management has decided not to give guidance on quarterly basis for now and has only provided for 2016 and 2017 year guidance.

In the quarter, the GoPro Mobile App was downloaded 2.75 million times leading to almost 24 million cumulative downloads.

Currently, GPRO has a Zacks Rank #4 (Sell), but it is subject to change following the release of the company’s latest earnings report. At least that’s what GoPro’s Q4 results hint at.

The culprit? GoPro blamed a $57 million charge to cost of revenue related to obsolete tooling, excess purchase order commitments, and excess inventory. The company also said chief financial officer Jack Lazar is stepping down.

In other news, President Anthony John Bates sold 7,434 shares of the firm’s stock in a transaction that occurred on Monday, December 7th. And GoPro also forecast first-quarter revenue of between $160 million and $180 million, a far cry from analysts’ prior estimate of $298 million in sales. Richard expects a loss per share of $0.75 in 2016 and $1.2 billion in revenue, down from the previous estimate of $1.4 billion.

In recent months, the company has been struggling to achieve its earlier rapid growth, and has faced friction in proving that it can innovate beyond its trademark action cameras. But that doesn’t seem to be working and the profit margins are likely to be much lower, so they’ll focus on the premium cameras in the future, including the Hero 4 Black, Silver and Session. Making the cameras a bit cheaper will make them more enticing to customers. Despite GoPro products possessing superior technology, it is facing ever increasing pressure from the likes of Xiaomi and Sony. The company is rolling out a new editing software package in March and the founder told analysts on a conference call that the next cameras will do a better job of connecting to smartphones and the cloud.

There weren’t many GoPro stocking stuffers over the holidays, either.