GoPro will close its offices in Austin and Los Angeles as it lays off teams in both cities, reports Variety, citing sources familiar with the matter. The camera maker is looking to wind down its downtown San Francisco office as well and relocate the remaining staff their to its corporate headquarters in San Mateo, California.
Entertainment division at the center of the layoffs
On Wednesday, the camera maker announced plans to lay off about 15% of its staff and shut its entertainment division to control costs.
During an appearance at the Nasdaq 35th Investor Program, GoPro CFO Brian McGee said, “Anything that’s not (…) core, that’s not making money, we will basically not do anymore.”
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During its most recent earnings call, the camera maker announced that it was considering restructuring to get operating expenditures down to $650 million for next year. McGee said on Wednesday that the company’s annual run rate is at $780 million currently.
GoPro’s entertainment division, which was supposed to transform its video production efforts into a revenue-generating business, will be at the center of the layoffs. The camera maker hired several high-profile names for its entertainment plans, including former Time Inc. live-streaming expert Joe Lynch, former MTV senior VP Ocean MacAdams, and HBO veteran Bill McCullough. This summer, GoPro executives had told Variety that the company plans to launch 32 original shows towards the end of this year and early next year.
“We looked at that pretty hard and said: That’s something we just can’t afford,” McGee said.
GoPro CEO is confident
GoPro admitted that the decision to lay off 200 employees and shut down its entertainment division is an attempt to discover some profits after two big product fails, including the bungled launch of the Hero 5 camera and the November recall of its Karma drone.
Since the company introduced its Session camera in 2015, it has been struggling financially. In January, the camera maker laid off 100 people and released a number of new initiatives and new products, including a cloud-based video storage service and a drone.
Despite all the problems, GoPro CEO Nick Woodman looked confident on Tuesday when he said consumer demand for GoPro cameras is strong and that they have sharply narrowed their focus to concentrate on their core business.
On Wednesday, GoPro shares closed up 1.5% at $9.98. In the past 12 months, the stock is down 51%, in comparison with a 6% gain for the S&P 500. In the last six months, the stock is down almost 3%.