Fitbit to Slash 6% of Workforce as Q4 Earnings Disappoint
Fitbit is set to cut 110 jobs, or about 6% of its global workforce after fourth quarter earnings disappointed, with only 6.5 million devices sold, as quarterly revenue was below the company’s guidance.
Fitbit shares have dived as much as 13 percent after revealing it will cut anywhere from five to ten percent of its global workforce and double down on other cost saving measures while revenues will fall short of guidance to the tune of around $150 million USD.
As of now, there isn’t any confirmation regarding the particular department or sub-division that will bear the brunt of the layoffs, but reportedly between 80 and 160 people could be impacted by the decision. This action will also save Fitbit around $200 million in costs.
“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,” Park continued.
Fitness bands are slowly losing its charm over the market and this could be the reason behind both the lower earnings and layoffs. Citing a source the report said that Fitbit is planning an app store, opening up its devices to third-party developers, and Pebble could play a big part in that move.
In this scenario, the layoffs could be seen as part of a restructuring to not just save money, but also to re-align the focus away from just a hardware company and into a dedicated software one.
Fitbit recently acquired Pebble, a decision perceived by many as the company’s new plan of action to move past its current wearable selection into more diverse holdings.
Park remained optimistic on the company’s future though, saying “With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.”
Are you happy with your Fitbit? Or have you moved onto Apple Watch or another fitness wearable?