Google to buy wearable device maker Fitbit for $2.1 bn

Alphabet-owned Google has agreed to buy wearable device maker Fitbit for $2.1 billion.
Fitbit customer
The Internet search giant aims to enter the fast-growing market for fitness trackers and smartwatches.

Fitbit has earlier lowered the 2019 revenue to $1.43 billion to $1.48 billion. Fitbit expects an increase in devices sold in 2019 and a decrease in average selling price.

Fitbit in July said it expects an increase in devices sold and a decline in average selling price in Q3 2019. Fitbit expects revenue to decline 15 percent to 10 percent year-over-year and to be in the range of $335 million to $355 million.

Fitbit said on Friday it had been offered $7.35 per share in cash, a premium of about 19 percent to the stock’s closing price on Thursday.

While Google has joined other major technology companies such as Apple and Samsung Electronics in developing smart phones, it has yet to develop any wearable offerings.

Alphabet, which generates about 85 percent of its revenue from sales of ad space and ad technology, reported revenue of $40.5 billion (+20 percent) in the third quarter. Net income of Google rose to $7.1 billion.

Fitbit earlier reported revenue of $314 million and net loss of $69 million for its second quarter of 2019. U.S. revenue represented 58 percent of total revenue.

International revenue represented 42 percent of total revenue and rose 14 percent to $133 million: EMEA revenue increased 33 percent to $88 million; Americas excluding U.S. revenue rose 21 percent to $19 million and APAC revenue declined 26 percent to $26 million.

Fitbit is used by more than 28 million users around the globe. “With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category and scale faster,” James Park, co-founder and CEO of Fitbit, said.

Fitbit has sold more than 100 million devices and supports an engaged global community of millions of active users, utilizing data to deliver unique personalized guidance and coaching to its users. Fitbit will remain platform-agnostic across both Android and iOS.
Fitbit products are carried in approximately 39,000 retail stores and in 100+ countries around the globe.

Fitbit’s paid subscription service, Fitbit Premium, uses unique data to deliver guidance and coaching in the Fitbit app to help reach health and fitness goals.

Revenue from Fitbit Health Solutions, which develops health and wellness solutions, grew 16 percent, with strength overseas, and is on-track to deliver its revenue of approximately $100 million in 2019.