Xiaomi Is Mulling the Acquisition of Action Camera Maker GoPro but Is Not Ready to Pay More Than What Is Required
Xiaomi is currently in a predicament; it does not want to overpay for the American company GoPro that is thinking about being acquired. Apparently, GoPro is struggling right now and Xiaomi isn’t about to pay a high premium for something risky. Xiaomi’s primary interest in GoPro is diversification in the run-up to going public.
GoPro Has Seen Declining Revenues From 2015 - Currently Valued at $700 Million
GoPro has seen its revenue slump in recent years. In 2015, the company reported a revenue of $1.6 billion, which decreased to $1.17 billion in 2017, with the slump expected to continue.
There are several reasons behind GoPro’s declining revenues. First of all, the company faces fierce international competition from companies that lure its customer away with much cheaper products. Secondly, action cameras aren’t something people upgrade every year and is often looked as a ‘buy once’ product.
The company is being compared to Palm, a PDA manufacturer that suffered a similar fate and ultimately wounded up in the hands of HP in 2010 for a sum of $1 billion. According to people close to this information, GoPro can expect to get the same money if it is sold as soon as possible. The company is currently valued at around $700 million, which is a depreciation of 36 percent compared to last year.
An industry insider claims that some anonymous bankers suggested DJI, a Chinese drone company to buy GoPro, but DJI did not find the offer lucrative. Whether it’s Xiaomi that buys GoPro or any other company, the revenue is unlikely to grow by a lot. The action camera manufacturer has been struggling to diversify and had to shut down its drone business in January after it tanked in the market. Action cameras are the only products it could count on.
GoPro started out well and gave a new meaning to cameras, but sadly its creative juices stopped flowing shortly afterward. Meanwhile, Xiaomi is doing very well with competitively-priced action cameras we are hopeful that it will save GoPro while also diversifying its business in the process.
News Source: The Information