Fitbit turns to cost cutting, lays off jobs, as Q4 revenue falls short
Fitbit remains the leading global wearables manufacturer, but its financial struggles continue. The company’s shares plunged more than 10% today on news that Q4 revenues will fall around $150bn short of expectations to around $580bn.
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The San Francisco outfit also revealed it is cutting 110 jobs or 6% of its global workforce, This is part of reorganisation that will cost the company about $4 million in the first quarter of 2017. For the full-year 2016, Fitbit expects annual revenue growth to be around 17%, down from the previous forecast of around 25%.
“Fourth quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential,” said co-founder and chief executive James Park.
“While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA, where revenue grew 58% during the fourth quarter.”
Fitbit expects 2017 to be another tough year, and is forecasting some $1.5-$1.7bn in revenue. This is signficantly below analysts’ average expectations of $2.38bn.
The company will not have the new products that helped it start 2016 off with such a bang, instead opting to release software updates. More than a half of the revenue in the first half of last year was accounted by the fashion-conscious fitness Blaze and Alta fitness trackers, illustrating the importance of keeping the product line fresh. Nevertheless, Fitbit is confident business will stabilise in the second half of the year.
“We believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general purpose functionality with a focus on health and fitness,” added Park.
“With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.”
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