Update – 1/30/17 – 11:30 AM CST: Engadget reports Fitbit will layoff 110 employees after fourth-quarter 2016 sales didn’t live up to expectations.
Activity tracking device maker Fitbit on Monday is expected to announce it will layoff 5-10% of its employees. The announcement is expected to come alongside its announcement of Q4 2016 financial results.
According to The Information, the job cuts are expected to affect between 80 and 160 people across multiple departments and save the company $200 million in costs. The Q4 results will be the second consecutive quarter in which Fitbit has missed its earnings guidance.
While the company is expected to blame the bad returns on a sluggish market, September market research data showed “basic wearables,” like those made by Fitbit, gaining in popularity, while “smartwatch” devices, like the Apple Watch, showed stagnant growth.
Overall, the wearable device market was reported to have grown 26.1%, with Fitbit leading the way. Their iOS app was reported to be one of the most downloaded in the App Store on Christmas Day 2016, leading to their stock rising 7.4% on the first trading day after the Christmas holiday, December 27.
Fitbit recently acquired wearables makers Pebble and Vector Watch, as well as reportedly showing an interest in Jawbone. (Talks with Jawbone were said to have ended following a “lowball” offer for the company from Fitbit.)
The acquisitions and the expected layoffs could indicate the firm is making a course correction, headed toward becoming more of a software company than continuing its current hardware focus. The Information reports that one source told it that the company is working to open its own App Store, allowing third-party developers to create apps for its devices.