Fitbit is eyeing a purchase of smartwatch maker Pebble, but it’s not clear how far the deal will go to bolster Fitbit’s murky prospects.
On Nov. 3, Fitbit warned analysts that revenue during the fourth quarter, which includes the all-important Christmas shopping season, would be drastically short of what Wall Street had been expecting.
San Francisco-based Fitbit told analysts during a conference call about the third-quarter results that revenue during the October-through-December quarter would range from $725 million to $750 million. Analysts had been predicting an average of $981 million in revenue.
The profit outlook also was dicey. The company predicted earnings per share, excluding certain one-time items, would range from 14 cents to 18 cents. But Wall Street had been hoping for 17 cents a share.
As a result of this gloom, coupled with overarching challenges for Fitbit, some tech analysts who talked with SiliconBeat on Thursday believe the company won’t gain much traction with a purchase of Pebble.
“This probably isn’t going to help Fitbit,” said Michael Tchong, principal analyst and founder of Ubercool Innovations, a Las Vegas-based firm that tracks the tech sector.
Word of the possible purchase was initially revealed in The Information and confirmed by The Verge.
“Fitbit does not comment on rumors or speculation,” said Michelle McCourt, a spokeswoman for the company.
Redwood City-based Pebble is expected to sell for about $40 million, experts tracking the deal estimated.
“Pebble is in trouble,” Tchong said. “Fitbit might just just be buying Pebble to get their list of customers.”
The other big challenge: Both companies are nimble but small upstarts attempting to survive in a land dominated by behemoths.
“Apple has its watch, Samsung is getting involved in this, and Google probably will as well,” said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher.
Plus, some consumers may wind up leaning toward a watch that can offer an array of capabilities, including health-related apps.
“Eventually, the major players in fitness wearables will be Apple and the Google environment,” Bajarin said.
Photo: Fitbit CEO James Park, right, smiles after ringing the ceremonial bell at the New York Stock Exchange as his company’s shares begin trading Thursday, June 18, 2015. Applauding, from left, are: Fitbit CRO Woody Scal, Vice President Andy Missan and CFO William Zerella. Fitbit is interested in buying smartwatch maker Pebble, according to a couple of reports this week. (Richard Drew/AP)