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