Fitbit reported a loss for Q4, which included the traditionally lucrative holiday sales period, with its CEO acknowledging the company “fell short” if its goals in 2016.
“Our ten-year history of building this category, coupled with our powerful brand and engaged global community gives us confidence we are making the right investments to support our vision and drive long term success,” James Park said.
The wearables market leader already said it was cutting more than 100 jobs (6 per cent of its workforce), in order to trim its spending. It said it cut its operating expenses run rate by $200 million.
Fitbit’s Q4 loss of $125.7 million compared with a prior-year profit of $87.4 million, on revenue of $573.8 million, down from $711.6 million. It sold 6.5 million devices in the recent quarter, down from 8.2 million in Q4 2015.
The company also put price tags on two recent transactions: Pebble ($23 million – less than reports estimated) and Vector Watch ($15 million). It said the deals gave it “intellectual property and talent”.
These moves also position it to move into the smartwatch category, where it hopes to “invigorate and capture a large addressable market by leveraging Fitbit’s brand and vast experience delivering a best-in-class health and fitness experience on the wrist”.
The Vector Watch deal also gives it a new engineering centre in Romania, “enabling the company to efficiently serve the global business and further expand its presence in EMEA”.
Fitbit also expects to see a “disconnect” between shipments and sales to customers to continue in 2017, due to high inventory levels.