Ouch.

Just when you thought things couldn't get any worse at GoPro (NASDAQ:GPRO), the company has just announced dismal preliminary results for the fourth quarter. After releasing the gloomy figures, shares hit a fresh all-time low of $10.29 in extended trading, or off nearly 90% from the all-time highs set in October 2014.

Worse yet for investors, there might be even more pain in store.

Where do we start?
Let's start with the preliminary results. GoPro expects fourth-quarter revenue to be right around $435 million. In comparison, the company's own guidance had called for sales of $500 million to $550 million, and analysts were expecting $521 million on average. It's worth pointing out that GoPro's guidance was already leaving a lot to be desired, as management acknowledged weak sell-through on the last conference call.

GoPro also took a $21 million revenue hit for price protections related to the HERO4 Session repricing, and overall sales were "lower than anticipated." On the cost side, GoPro incurred a charge of $30 million to $35 million related to excess purchase order commitments, excess inventory, and obsolete tooling. Naturally, the company is excluding these from its non-GAAP gross margin calculations.

It was small consolation that operating expenses came in a little bit lower than guidance, expected in the range of $150 million to $152.5 million in the fourth quarter.

Inventory is evil
Perhaps more troubling is GoPro's inventory position. Not only is this inventory being overvalued since GoPro hasn't absorbed any charges related to the carrying value (it seems to have only recognized revenue reductions thus far), but there's a lot of it.

At the end of the September quarter, GoPro was sitting on $289.5 million of inventory, a massive build up compared to the $153 million of inventory that it closed out 2014 with. That total was also up by $70 million sequentially, and over $80 million of the inventory was related to new products introduced in 2015. Most products were at their target channel inventory levels, while Session and HERO+ LCD were above target levels.

When asked on the last call, CEO Nick Woodman declined to provide additional color on these target inventory levels in terms of weeks of inventory.

"Reallocation"
On top of all of this, GoPro said it will implement a "reallocation of resources" and plans on cutting 7% of its workforce. At the end of last year, it had over 1,500 employees, so the cuts translate into roughly 105 unlucky workers that will lose their jobs. Zander Lurie is also resigning as the head of GoPro Entertainment, but is joining the board of directors. This is potentially evidence that GoPro's media strategy is failing to gain traction. 

While GoPro continues to try to diversify its revenue streams, competitors have now taken note of its relative success and are jumping in. Nikon just unveiled its new action camera at CES last week, the KeyMission 360, that can shoot 360-degree video. GoPro is doing likewise, but there are more where that came from.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.