GoPro, Inc. (NASDAQ:GPRO) said Wednesday it will cut about 15 percent of its workforce and close its entertainment division in order to reduce cost. The company announced the restructuring plan in a company statement on Wednesday. The plan included the closure of its entertainment division, facilities reductions, and the elimination of more than 200 full-time positions plus the cancelation of open positions for a reduction in force of approximately 15 percent.
The company expected the restructuring will reduce 2017 full-year operating expenses to about $650 million and achieve profitability next year. The company also estimated the restructuring charges would be approximately $24 million to $33 million.
"They’re focusing on their core activities, and anything else that doesn’t make money, they can’t afford to continue," said Rob Stone, an analyst at Cowen & Co LLC. "The entertainment was part of the overall brand but doesn’t make money and isn’t core so it’s gone." The company had been struggling to drive growth in the recent years. Earlier this month, Gopro posted worse-than-expected revenue in the third quarter and this marked the four straight revenue decline.
The company bet on its two new products and its Karma drone, which released in October, to boost sales. However, both its Hero 5 camera and drone experienced production issues. The company recalled about 2,500 drones one week after its release. Shares rose 2.75 percent to $10.10 at 1:18 p.m. The stock had lost more than half of its value this year.
"We have a lot of work to do to finish the quarter and our fiscal year, however our HERO5 cameras have been very well-received by critics and consumers alike," notes CEO Nicholas Woodman.