GoPro’s strategic review is an asset-reframing play: a consumer hardware brand with declining retail revenues testing whether 24 years of camera technology, IP and manufacturing capability carry higher value inside a defense or industrial platform. The answer will matter beyond GoPro.
GoPro, Inc. has authorized its board to explore strategic alternatives, including a sale or merger, after its push into the defense and aerospace markets generated several unsolicited acquisition inquiries within weeks. The California-based action camera maker said May 11 that it has engaged – or will engage – independent financial and legal advisors to support the review. No timetable has been set and no decisions have been taken. The company declined to comment further until it deems additional disclosure appropriate.
Last month, the company engaged Oliver Wyman, a management consultancy with expertise in defense-sector strategy, to identify new markets for the company’s imaging and hardware technology.
The underlying rationale for SGIE’s audience is a familiar one: a consumer hardware brand with significant technology and intellectual property assets, constrained by a shrinking addressable market, is testing whether those assets carry higher value inside a larger platform than as a standalone public company.
And what better, in times like these, than the defense industry?
GoPro’s market capitalization stood at approximately $224 million as of May 11 – a fraction of what it was at its 2014 peak – while its first-quarter results, also released Monday, showed a wider adjusted loss (35 cents per share, against 12 cents a year earlier) and declining revenue across hardware, subscriptions and services. But the stock rose more than 27 percent in after-hours trading on the announcement.
The company said it has not set a timeline for the review and gave no guidance on whether a transaction would be pursued or consummated.
The SGIE take
Now, for sporting goods intelligence, the question we know very few in the industry are available to answer is: how many are now filling their order books with purchases or commissions from military, defense, and state actors for equipment, boots, technical underwear and so on?
We ask not because we disagree, but the opposite: we think more disclosure by sporting goods and outdoor companies would help our societies be aware that defense is also an important component of our economies, and that companies supporting defense should not shy away from transparency.
