Business

Google owner makes offer to buy Fitbit: Sources

Smartwatch maker's shares rise 27% on news, Alphabet shares up 2%

Google owner Alphabet has made an offer to acquire US wearable device maker Fitbit , as it eyes a slice of the crowded market for fitness trackers and smartwatches, people familiar with the matter said on Monday.

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.

There is no certainty that the negotiations between Google and Fitbit will lead to any deal, the sources said, asking not to be identified because the matter is confidential. The exact price that Google has offered for Fitbit is not known.

Both Google and Fitbit declined to comment.

Fitbit shares rose 27 per cent on the news, giving the company a market capitalisation of US$1.4 billion (S$1.9 billion). Alphabet shares rose 2 per cent to US$1,293.49.

A deal for Fitbit would come as its dominant share of the fitness tracking sector continues to be chipped away by cheaper offerings from companies such as China's Huawei Technologies and Xiaomi.

Fitbit cut its 2019 revenue forecast in July, blaming disappointing sales of its newly launched smartwatch Versa Lite. The watch is priced at US$160, compared with US$200 for the full version.

It can track workouts and heart rate but lacks features such as the ability to store music directly.

In August, Fitbit said it had signed a contract with the Singapore Government to provide fitness trackers and services in a health programme it said could reach up to one million users.

Alphabet on Monday reported a sharp drop in profit over the past quarter as it ramped up spending.

Profit dipped 23 per cent from a year ago to US$7.1 billion as revenue grew 20 per cent to US$40.5 billion for the California tech giant and Internet search leader.

Shares in Alphabet fell 1.1 percent in after-hours trade on the weaker-than-expected profits.

Digital advertising on Google continued to be the primary money-maker for Alphabet - accounting for some US$34 billion in revenue.

Industry tracker eMarketer forecast that Google will generate US$105.33 billion in net digital ad revenue this year, taking a 32 per cent share of the worldwide digital ad market.

Fitbit is scheduled to report third-quarter earnings in November. - REUTERS, AFP

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