Fitbit estimates lower fourth-quarter revenue, to cut jobs

(Reuters) - Fitness-band maker Fitbit Inc said it would cut about 6 percent of its workforce and estimated fourth-quarter revenue well below its own forecast, hurt by weaker-than-expected demand during the holiday shopping season, especially Black Friday.

The ticker symbol for Fitbit is displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) February 23, 2016. REUTERS/Brendan McDermid

Fitbit’s shares fell 14.42 percent to a record low of $6.17 in morning trading on Monday.

The company’s colorful wristbands and clippable widgets, which track heart rate, calories, sleeping patterns and step counts, have come under pressure in a peaking market for wearables and as new rivals step in.

“I’m not sure how many people out there, who don’t have a fitness tracker yet, will all of a sudden will feel the need to go out and get one,” Wedbush analyst Nick McKay told Reuters.

The company is also facing intense competition from rivals such as Apple Inc, Samsung Electronics, Xiaomi Inc [XTC.UL] and Garmin Ltd.

Fitbit said it now expects fourth-quarter revenue between $572 million and $580 million, much lower than its previous forecast of $725 million-$750 million.

Analysts on average were expecting revenue of $736.36 million, according to Thomson Reuters I/B/E/S.

The company, in November, forecast revenue for the key quarter below Wall Street estimates, partly due to production issues related to its new Flex 2 wristband.

Fitbit’s weak results highlight the risks of relying on a hit-driven device business, where consumer tastes are fickle, competition intense and differentiation limited, SunTrust Robinson Humphrey analysts wrote in a note.

Fitbit said it estimates sales of 6.5 million devices in the quarter compared with 8.2 million devices a year earlier.

“To address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs,” Fitbit Chief Executive James Park said.

Fitbit, which had about 1,627 employees as of Oct. 1, said the reorganization will impact around 110 employees, and it expects to record about $4 million in charges in the first quarter of 2017.

Fitbit also said it expects an adjusted net loss of 51-56 cents per share in the fourth quarter, compared with a previously announced profit of 14-18 cents. Analysts on average were expecting a profit of 17 cents.

The company also forecast 2017 revenue of $1.5 billion-$1.7 billion, widely missing analysts’ average estimate of $2.38 billion.

Up to Friday’s close, stock had more than halved in the past 12 months.

Reporting by Rishika Sadam and Aishwarya Venugopal in Bengaluru; Editing by Martina D’Couto