Parrot Cuts Jobs After Drone Discounts at Christmas Hurt Profitsby
Eliminating 290 posts and restructuring consumer drone unit
Aims at rekindling sales growth, reaching break-even in 2017
Parrot SA, the maker of toy drones you can fly from your phone, is cutting a third of its staff after lowering prices at Christmas to lure consumers from rivals including market leader SZ DJI Technology Co.
Sales were short of what the company had forecast in the fourth quarter even as profitability fell in consumer drones, to a level unsustainable in the long-run, Parrot said Monday in a statement. The revamp, which will cost 45 million euros ($47.7 million), including 20 million euros in asset writedowns in 2016, is aimed at rekindling sales growth to 10 percent as well as reaching break-even at an operating level in 2017. The company will cut 290 jobs of a 840 total.
Shares fell 17 percent to 9.14 euros at 10:15 a.m. in Paris trading, the biggest drop in more than 8 years.
Parrot has been facing tough competition from the likes of DJI and GoPro Inc. to grab a share of a consumer drone market that’s estimated to reach $4.19 billion by 2024. While the fight has focused on additional features, like live streaming and high-definition cameras aimed at more serious consumers, the market has also been flooded with cheaper models from upstarts, competing on price.
Sales were 85 million euros in the fourth quarter, less than the 100 million euros the company had forecast at the end of November. Consumer drones made up 58 percent of revenue.
Meanwhile, Parrot’s commercial drones and systems for cars, including infotainment, performed in line with expectations. The company said it’s on track to sign a definitive agreement with Faurecia this month over a capitalistic partnership in the auto business.