Ambarella Doesn't Believe GoPro's 'Competitive Solution' Changes The Competitive Landscape

In January, Benzinga reported that GoPro Inc GPRO could add Qualcomm, Inc. QCOM as a component supplier and, consequently, lessen its dependence on Ambarella Inc AMBA.

Now, Ambarella is bracing for a financial hit as news of GoPro’s “second source” shakes 2018 sales guidance.

“Based on our current level of interaction with GoPro on product development activities, we believe GoPro is incorporating a competitive chip for at least one new mainstream camera product, which will negatively impact our revenues in the second half of the year,” CFO George Laplante said during Tuesday’s fourth-quarter earnings call.

CEO Feng-Ming Wang suggested the rival technology isn’t expected to have features beyond Ambarella’s offerings, such as 4G LTE capabilities.

Related Link: Ambarella's Hyper-Seasonality Continues To Be A Concern

“We do believe that it's very unlikely that an app-processor type of chip can be used in a GoPro form factor due to the power consumption limitation that we talked about in the past,” Wang said. “So I really don't think that's a processor type of chip.”

Wang added that GoPro’s diversified sourcing doesn't reflect a trend in the greater camera market.

“From our perspective, we really haven't seen any change in the other markets or customer environment from a competitive standpoint,” Laplante said.

The company predicts GoPro revenues to decline between 3 percent and 6 percent during the upcoming fiscal year, but non-GoPro revenues are expected to grow between 20 percent and 32 percent.

Ambarella shares dropped as low as 5.5 percent Wednesday and were trading around $55.90 at time of publication.

Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsNewsMoversTechTrading IdeasFeng-Ming WangGeorge Laplante
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...