Wearable manufacturing company Fitbit, which acquired Pebble for $40 million in December 2016, reportedly intends to lay off a number of employees.
According to a report from The Information, which cites reliable sources, Fitbit will cutting its workforce by 5 percent to 10 percent.
"Fitbit is to cut between 5% and 10% of its employees, the company will announce on Monday, while disclosing that its fourth-quarter results were below expectations. The disclosures are the latest sign of a slowdown in the wearables market, according to two people briefed on the news," noted the publication.
The reports mentions that this decision has been prompted by terrible performance in Q4 2016. The company is also expected to release its results on Jan. 30.
Why Will Fitbit Lay Off People?
Low revenue generation has been cited as one of the main reasons why Fitbit is slated to remove around 80 to 160 workers.
Taking these figures into account, the scenario looks grim, with almost 10 percent of Fitbit's 1,600 workforce slated to become unemployed because of terrible sales.
The move comes close on the heels of the wearable maker acquiring Pebble in December 2016. The deal has been quite significant for Fitbit since it provides it with control over Pebble's operating platform and other IPs.
Reportedly, the laying off the employees and the poor earnings is due to the market conditions. Apparently, the consumer interest in fitness trackers is on the decline, which has resulted in sluggish sales. It seems Fitbit has identified this pattern recently as the company was on course to diversify its wearable segment with the acquisition of Pebble.
Industry sources have revealed that Fitbit is keen on developing an app store, which will aid third-party developers in gaining access to its wearable lineup.
If this is true, then Fitbit could potentially be laying off employees in a bid to restructure the company, which in turn would save it some money. Moreover, the move would divert the focus from it merely being a hardware-oriented company to a software-based enterprise.
The shift could pave the path for Fitbit to be better equipped when competing with rival wearable device makers such as LG, Apple and Samsung.
Impact
While it is believed that there are around 80 to 160 Fitbit employees who will receive the pink slip, it is unclear whether or not some of the workers include those from Pebble.
Experts are of the opinion that these jobs cuts may help the company save nearly $200 million annually.
Fitbit is remaining mum on the issue.
