GoPro is in Trouble

Long the "Hardware is Hard" Narrative

GoPro Inc. ($GPRO) announced extreme guidance this past week. Extremely bad guidance. The hardware-manufacturer-wouldbe-software-developer-wannabe-content-provider-aspiring-drone-player lowered guidance for revenue and gross margin and offsetting measures like job cuts, exec compensation cuts, and discontinued products (discounted drones anyone?). Disputed reports abound that JPMorgan has been hired by Nick Woodman to shop the company. Doesn’t sound like he’ll be doing many guest Shark Tank appearances anytime soon. The company has a $300mm credit facility and $150mm in converts. With negative operating cash flow and and increasingly bad trends, Woodman may soon be fielding pitches from restructuring bankers

But at least he's still in business. Luma, a home WiFi system maker reportedly had to effectively sell for parts to First Alert. Investors included Andreesen HorowitzAccel Partners and, get this, Amazon Alexa Fund. Similarly, Eero, the mesh Wi-Fi router startup, laid off 20% of its workforce. It has raised $90mm in VC. Yes, hardware is hard.

But not all tech is "busted" and not ALL hardware is "hard." Apparently 16% of Americans now own a smart speaker. In case you weren't convinced that "voice" may be a VERY big piece of the future. As we noted around this time last year on PETITION, mass adoption of voice has the potential to disintermediate brands and cause more retail distress


This is interesting. Upshot: retailers ought to move away from the traditional seasonal approach if they want to compete with millennials insatiable year-round appetite for experiences. (PETITION NOTE: of course, it's too late for a number of retailers: we suspect this year's holiday season is make-or-break for a number of retailers, e.g., Nine WestCharlotte Russe99 Cents Only Stores). And marketers are focused on the 26 year-old millennial who apparently barely know how to put on pants in the morning (firewall). Good luck, though: JP Morgan ChaseCitigroup, and Bank of America just reported numbers and noted higher credit card-related losses in the last quarter. Each is increasing reserves against losses. Spending was up last month in auto, retail and restaurants, by the way. Query whether that spending will translate into future credit card losses and reserves.

Distressed Investors Are Bullish on China Distress

"Bankruptcy could become common". Ruh roh. Let the vulturing begin. NowShoreVest Capital Partners is following (firewall) Bain Capital and Oaktree Capital Management into China with a $750mm fund. And they're not alone: JP Morgan's Vice Chairman of Asia Pacific is starting his own distressed fund focusing on non-performing Chinese loans.