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GoPro predicts profits, thanks to massive layoffs



GoPro Inc., CEO Nick Woodman, sold very bullish Wednesday in forecasting a return to profitability in 2019 for the action camera.

"GoPros brand has never been stronger, our products never get better," Woodman told analysts. "And we're kicked up for the coming year."

GoPro announced revenue slightly above Wall Street expectations Wednesday afternoon, breaking a long streak of breaking up the holiday neighborhood. Woodman said the company is planning to "capitalize on this moment, expand growth and profitability with a commitment to keep operating costs at or below $ 400 million."

But don't be overexcited about GoPros

GPRO, + 0.78% future. Woodman's latest comment on his goal of keeping operating costs at or below $ 400 million is key because it shows how he has accomplished this: Massive layoffs. At the end of 201

6, GoPro had 1,552 employees. By the end of 2017: 1,273 employees. Woodman said Wednesday that the company currently employs 841 workers.

Wall Street's response to the positive comments was a bit subdued and its stocks even fell short during the conference call, just to bounce back a little and end the extended trading session with a 2.1% gain. The stock is rolling so far this year, up 21.5% since January, when Woodman told MarketWatch that there was no bogeyman in the fourth quarter.

GoPro is still a niche electronics company, but at least Woodman realizes that GoPro is, at best, focusing on its core users and offering them services, such as low cost of storing images rather than attempting to extend its products. who has a core audience for extreme sports enthusiasts.

The company said it expects that 2019 revenue will grow at a rate of about 5% to 8%, slightly higher than Wall Street expected, and a break with the latest recent declines. According to FactSet, consensus for 2019 is revenue growth of around 4% to $ 1.2 billion. Compared to three years of falling or flat income: a decline of 2.7% in 2018, down 0.5% in 2017 and a decrease of 26.8% in 2016.

Managers expect revenue to grow due to a strong reception to their higher-end Hero7 Black action camera, as well as the new routes to recurring revenue.

"We expect our mix of cameras to continue to shift to the high end, and therefore we expect ASP to increase, and we expect to increase the GoPro Plus subscription service to our enhanced offering and expanded marketing efforts," Chief Financial Officer Brian McGee said in the conversation. "We expect revenue to grow every quarter on an annual basis."

GoPro seems to have accepted its destiny as a smaller niche market player in consumer electronics, a brutally difficult business, especially for hardware companies. The company looks like looking like Apple Inc.

AAPL, + 0.03%

for services like cloud storage for growth – GoPro Plus has over 200,000 subscribers and more features are added.

But GoPro is now a slow growth company that wins through cuts and cost adjustments. If the one-digit revenue growth does not spread as it hopes, it has few levers left to pull. In this cutthroat industry, where GoPro's rivals include smartphone cameras, investors can never be too hopeful or complacent with turnarounds, as a niche business can quickly become outdated.

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