(Fitbit)
Shares of Fitbit are down 9.2% at $6.55 a share after the company announced preliminary fourth-quarter results that were well below its previous estimate.
In a release sent out Monday, Fitbit said it expected to announce that it sold 6.5 million devices in the crucial holiday quarter, and it said fourth-quarter revenue would come in at $572 million to $580 million, well below its previous guidance range of $725 million to $750 million.
"Fourth-quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company's long-term potential," James Park, the Fitbit cofounder and CEO, said in a statement. "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."
As part of its cost-cutting effort, Fitbit is:
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"Targeting a reduction in the 2016 exit operating expense run rate of approximately $200 million, to approximately $850 million for 2017."
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"Conducting a reorganization of its business, including a reduction in force, that will impact approximately 110 employees, constituting approximately 6% of the company's global workforce, creating a more focused and efficient operating model."
The company says the reorganization efforts will save about $4 million in the first quarter of 2017.
Shares of Fitbit had a rough 2016, tumbling by 75% amid an increasingly competitive market for wearable devices. In November, the company slashed its earnings-per-share guidance for the holiday quarter to just a quarter of what analysts had been expecting.
(Markets Insider)
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