Fitbit's $23M Pebble purchase lower than expected, under financial pressure from Apple Wat...
Fitbit has confirmed it paid $23 million for smartwatch maker Pebble, far below the expected value of the deal when it was announced in early December, amidst both companies' struggles against the Apple Watch.
Initial reports suggested Fitbit would be paying out between $34 million and $40 million for Pebble, which is seen more as an acquisition of software and talent to combat the dominant Apple Watch in the wearable device market. Only 40 percent of Pebble's employees were offered positions at Fitbit's San Francisco headquarters, with the rest let go outright or offered a severance package.
Fitbit hasn't assumed debts accumulated by Pebble, and is selling off the majority of assets and inventory. Most Pebble products will be discontinued, while backers of the Pebble 2 who have yet to receive rewards are being refunded their pledges.
The purchase price may be considered too low for fans of the Pebble smartwatch, one of the first examples of the product category to achieve a level of popularity with consumers. It is noted that the $23 million price is approximately the same as funds raised in both of Pebble's Kickstarter campaigns, though the fact that the company also received more traditional investment as well means investors are likely to have lost money on their stake.
Fitbit revealed the value of its Pebble acquisition as part of its recent quarterly and full year results, with the lower purchase price minimizing the damage to Fitbit's financial situation. The purchase of Vector Watch, a lower-profile smartwatch company, is also confirmed in the report with a price of $15 million, seemingly making the deal for the more-recognizable Pebble more of a bargain.
According to the quarterly figures ending in December, Fitbit's revenue dropped year-on-year from $711.6 million to $573.8 million, while the net profit of $64.2 million at the end of 2015 has turned into a net loss of $146.3 million for the quarter. For the full year of 2016, revenue of $2.17 billion is up from the $1.86 billion achieved in 2005, but heavy costs dragged the 2015 net profit of $175.7 million down to a $102.8 million net loss.
Fitbit has already started to correct its course following the disastrous fourth quarter, including cost reductions and corporate restructuring that should save around $200 million, and the loss of 107 jobs. Talent acquisitions, such as that of Pebble's staff, will help the company spread out more from fitness tracking into providing more smartwatch functionality to its customers, allowing it to compete more directly with its main competition, the Apple Watch.
Initial reports suggested Fitbit would be paying out between $34 million and $40 million for Pebble, which is seen more as an acquisition of software and talent to combat the dominant Apple Watch in the wearable device market. Only 40 percent of Pebble's employees were offered positions at Fitbit's San Francisco headquarters, with the rest let go outright or offered a severance package.
The price Fitbit paid for Pebble is roughly the same amount the smartwatch maker raised through two highly successful crowdfunding campaigns.
Fitbit hasn't assumed debts accumulated by Pebble, and is selling off the majority of assets and inventory. Most Pebble products will be discontinued, while backers of the Pebble 2 who have yet to receive rewards are being refunded their pledges.
The purchase price may be considered too low for fans of the Pebble smartwatch, one of the first examples of the product category to achieve a level of popularity with consumers. It is noted that the $23 million price is approximately the same as funds raised in both of Pebble's Kickstarter campaigns, though the fact that the company also received more traditional investment as well means investors are likely to have lost money on their stake.
Fitbit revealed the value of its Pebble acquisition as part of its recent quarterly and full year results, with the lower purchase price minimizing the damage to Fitbit's financial situation. The purchase of Vector Watch, a lower-profile smartwatch company, is also confirmed in the report with a price of $15 million, seemingly making the deal for the more-recognizable Pebble more of a bargain.
According to the quarterly figures ending in December, Fitbit's revenue dropped year-on-year from $711.6 million to $573.8 million, while the net profit of $64.2 million at the end of 2015 has turned into a net loss of $146.3 million for the quarter. For the full year of 2016, revenue of $2.17 billion is up from the $1.86 billion achieved in 2005, but heavy costs dragged the 2015 net profit of $175.7 million down to a $102.8 million net loss.
Fitbit has already started to correct its course following the disastrous fourth quarter, including cost reductions and corporate restructuring that should save around $200 million, and the loss of 107 jobs. Talent acquisitions, such as that of Pebble's staff, will help the company spread out more from fitness tracking into providing more smartwatch functionality to its customers, allowing it to compete more directly with its main competition, the Apple Watch.
Comments
Still not bad for Pebble founders considering they had nothing a few years ago.
This is scary or Fitbit and it seems Apple has no competition in this space.
Remember, every market Apple enters they have a new competitor so I don't believe droid is it.
It might also reflect a waning optimism that the Pebble acquisition would actually constitute that much help in combating Apple Watch...
I like the look of AppleWatches but they seem so big and heavy. Hopefully within a year or two Jony will have made it thinner.
Are there any male AI readers who wear a 'ladies' AppleWatch? Just curious...
We can speculate until the cows come home, but how about some actual reporting and facts as to why the price was lowered to justify the conclusion that Fitbit is suffering at the expense of the Apple Watch success. That's all I'm saying.
I'm thinking, it's mostly brand name, a few patents, that's worth anything now.
For Yahoo, they're main brand is worth next to nothing, but their sub properties are still worth a lot; the $350M cut was basically shaving off the last rest of worth off the original Yahoo properties' worth.
I was tempted to get the 38mm - and sometimes still think I should have. My wife's 38mm looks fine on me (I'm 6'0, 190lb, very average middle-age guy :-) The main reason I opted for the 42mm - and my experience has borne this out - is the battery life: the 42mm definitely lasts a little longer. We never have trouble with the watch lasting a full day, but sometimes we go on an overnight trip and don't bother with the watch charger. Having fully charged both watches Saturday morning, by Sunday night, my wife's watch used to pretty much be gone, while mine would still have 20+%. The series 2 seems to be better at conserving battery life: my wife and I just came back from one of these overnight jaunts, and my watch still had some 60% and my wife 30% (maybe this was a one-off because we didn't use 'workout' mode on this trip).
For what it's worth, I don't find the watch bulky at all. If you look at it by itself, it's a little bulky (but still nothing like most Android watches), but you don't see the bottom protrusion at all when you wear it as it kind of pushes into the skin (not in an uncomfortable way either). The only design choice I'm ambivalent about is the rectangular shape: round, to me, just looks a little better. But, from a functional perspective, rectangular is simply better (just try showing as much information as the "modular" face shows - on a round watch whose diameter is the same as the Apple watch width.)