Is GoPro Inc (NASDAQ:GPRO) shifting the goal post? The camera company just reported more disappointing earnings after market close yesterday, but promised investors to somehow open its cameras to a new audience. Most have not materialized, and the overall result is that GoPro hasn’t quite impressed shareholders.
Now, GoPro is making more promises, but different ones. The company is now pitching “simplify” as the sure shot to the future.
By the simplify strategy, GoPro means streamlining its product line by ending the sale of certain cameras. The idea behind the strategy is to cut costs and allow for more pointed marketing efforts. Management hopes it will boost sales and profits over the long-term.
Poor Q4 results
With the lackluster 4Q2015 earnings results, investors can only be more cynical of GoPro’s new simplicity promises. The company reported that sales fell 31% YoY to $437 million in the usually busy fourth quarter. As if to warn of more danger ahead, GoPro also provided soft sales guidance for the current quarter. The company is looking for 1Q2016 sales in the band of $160 to $180 million, yet analysts were expecting sales of $298 million.
It has come to the point where GoPro is trying to be honest with itself. There seems to be a realization within the company that there is no point in having a large portfolio of cameras that are not adding to the top and bottom lines as needed. As such, GoPro will start phasing out its entry-level cameras. In particular, the company will be ending the sale of Hero, Hero+ and Hero+ LCD. That decision will certainly come at a cost, but management is willing to pay the near-term price for a better longer-term future.
With the Hero cameras out of sight, GoPro hopes to double down efforts to promote the uptake of Hero4 Session ($200), Hero4 Silver ($400) and Hero4 Black ($500).
In addition to dropping some camera products, GoPro also intends to enhance its software. According to CEO Nicholas Woodman, they are working to improve product software as well as video processing software for content extracted from their cameras. Many people still report challenges in using GoPro’s editing tools.