Pebble is in troubled waters owing to declining sales and according to a new report it may have found a buyer in Fitbit for about $40 million.
The report of the acquisition first emerged on The Information, which claimed that post the acquisition, the fitness wearables company will be shutting down Pebble. There was word on the block that Pebble has been looking for a buyer owing to financial troubles. To reduce the outgoing funds, the company even went about culling 25 per cent of its staff earlier this year.
There were reports that when Pebble was at its peak in 2015, it got a buyout offer from Citizen for a whopping $740 million – the offer which Pebble CEO, Eric Migicovsky, rejected. Subsequently, Intel offered $70 million, but that offer was reportedly rejected as well. It seems that the financial troubles for Pebble aren’t ending and this eventually forced the CEO to accept the buyout offer from Pebble at somewhere between $34 and $40 million. According to confirmed reports Pebble has to payout $28 million in debt and if the deal amount is true, it barely covers the debt.
Even as many small players working in the fitness wearables segment have withered away, Fitbit remains the reigning king. According to an IDC survey in September, Fitbit has continued its lead in the connected wearables market in Q2 of 2016. The global market overall grew by 26.1 per cent in the period over last year. But Fitbit has seen a drop in Q3 earnings, and generated ‘below expected revenue’ during the key-holiday season owing to production issues related to the company’s new Flex 2 wristband and due to soft demand.
The problem is that the smartwatch segment has not quite grown as it was expect. Apple Watch remains the leading smartwatch in the world, and even the Android Wear segment has failed to take off. And Pebble has been struggling for sometime. So an acquisition by Fitbit should not be come as a surprise.