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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.
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“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.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.