Fit­ness band RIP?

Fit­bit fit to be tied

Jamaica Gleaner - - INTERNATIONAL NEWS - – Matt Krantz

(TNS): FIT­BIT (FITB), the mas­ter of the ac­tiv­ity tracker, is hav­ing trou­ble mak­ing its step count and in­vestors are cool­ing off on the whole idea.

Shares of the con­sumer elec­tron­ics com­pany dropped by 30 per cent last Thurs­day. It’s just the lat­est blow for the com­pany try­ing to main­tain lead­er­ship in a mar­ket for over­all wear­able tech­nol­ogy that’s in rapid de­cline and stuffed full of com­pe­ti­tion.

Shares of Fit­bit are tak­ing their lat­est leg down af­ter the com­pany late last Wed­nes­day re­ported third-quar­ter rev­enue that missed ex­pec­ta­tions and the com­pany cut its guid­ance for the fourth quar­ter, the com­pany’s most cru­cial of the year (think hol­i­day gifts and New Year’s res­o­lu­tions). An­a­lysts on av­er­age have slashed their rev­enue fore­cast on the com­pany by nearly 25 per cent to $743.04 mil­lion for the quar­ter, says S&P Global.

HARD­WARE FAD

The stock’s im­plo­sion re­flects grow­ing scep­ti­cism that ac­tiv­ity bands and smart­watches will be a grow­ing cat­e­gory go­ing for­ward, says Ross San­dler, an­a­lyst at Deutsche Bank in a note to clients. “Shares as­sume (Fit­bit) is a hard­ware fad that will see neg­a­tive growth into per­pe­tu­ity,” he says.

Fit­bit is just the lat­est gad­get maker that’s seen its shares and out­look get crushed as con­sumers’ draw­ers are al­ready stuffed with elec­tronic de­vices, es­pe­cially smart­watches. Sales of wear­able de­vices, which in­clude smart­watches and ac­tiv­ity track­ers, in the third quar­ter fell to half that of year-ago lev­els, says In­ter­na­tional Data Cor­po­ra­tion. Head­phones and ac­tiv­ity track­ers have seen ad­di­tional high-pro­file ex­its and re­trench­ments. Mi­crosoft, which is work­ing on be­yond-the­curve tech­nolo­gies like ar­ti­fi­cial in­tel­li­gence and 3-D mod­el­ling, has stated it has no im­me­di­ate plans to re­lease an up­date to its Band sports tracker. Sales of Ap­ple’s smart­watch have barely moved the nee­dle, com­pared with mas­sive sales of its smart­phone. That’s not to say the space is en­tirely dead. Garmin has been the no­table bright spot in the in­dus­try as it con­tin­ues to use en­gi­neer­ing ex­per­tise to keep a step ahead, even as its busi­ness for nav­i­ga­tion de­vices for cars is un­der as­sault by smart­phone apps. The com­pany has fo­cused on nav­i­ga­tion de­vices for ma­rine uses and has con­tin­ued to in­no­vate with wear­ables de­signed for se­ri­ous ath­letes. Shares of Garmin are up 28 per cent this year. Fit­bit’s rev­enue is grow­ing, too, just not as rapidly as in­vestors thought it would be­fore. Fit­bit’s rev­enue this year is ex­pected to hit $2.3 bil­lion, up 26 per cent from 2015 lev­els, S&P Global says. Next year, an­a­lysts think Fit­bit’s rev­enue will jump 14 per cent to $2.7 bil­lion and profit to rise nine per cent to $218 mil­lion. In­vestors might think fit­ness track­ers are a fad and growth will dis­ap­pear, but that “isn’t hap­pen­ing now and we don’t see play­ing out in 2017,” San­dler says.

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