Fitbit has announced preliminary results for Q4 2016. The company is slashing 6 percent of its global workforce which is 110 of its employees as a result of disappointing fourth quarter financials.
The wearable maker expects to report 6.5 million devices sold and revenue for the fourth quarter of 2016 to be in the range of $572 million to $580 million, compared to the company’s previously announced guidance range of $725 million to $750 million. Fitbit expects annual revenue growth to be approximately 17% from the previous forecasted growth of 25% to 26%. The company says it is also cutting expenses and reorganizing its business and the cost of these reorganization efforts is expected to be approximately $4 million to be recorded in the first quarter of 2017.
It is targeting a reduction in the 2016 exit operating expense run rate of approximately $200 million, to approximately $850 million for 2017, which includes realigning sales and marketing spend and improved optimization of research and development investments.
James Park, Fitbit co-founder and CEO said,
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. With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.
Fitbit recently acquired two smartwatch startups, Pebble and Vector to further bolster its push in the wearable market.