Fitbit to restructure, lay off 110 as Q4 unravels: Can it make business model shift?

Fitbit didn't come close to delivering enough units to hit its fourth quarter outlook. Now the company hopes it can become more of a data-driven health platform. It's a tough turn.

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The Fitbit Blaze

Fitbit said its fourth quarter will fall short of expectations amid weak demand and that the company will cut about 6 percent of its workforce. Now Fitbit plans to rebound via leveraging data to offer personalized experiences.

It remains to be seen whether Fitbit can deliver on CEO James Park's goal to "stimulate new areas of demand by leveraging the data we collect to deliver a more personalized experience." Recent headlines highlight where Fitbit is going:

The strategy makes sense, but the fourth quarter financials highlight how much work Fitbit has ahead of it. For the fourth quarter, Fitbit said it sold 6.5 million devices and will deliver revenue between $572 million to $580 million.

Fitbit initially projected fourth quarter between revenue of $725 million to $750 million. The company's 2016 revenue growth will be about 17 percent well below Fitbit's target of 25 percent to 26 percent.

In addition, Fitbit said its fourth quarter non-GAAP loss will be between 51 cents a share to 56 cents a share. Fitbit had projected fourth quarter non-GAAP earnings to 14 cents a share to 18 cents a share. Also; CNET: Best wearable tech of 2017

Not surprisingly, Fitbit said it will restructure. The company said it is looking to cut its annual expenses by about $200 million and cut 110 employees, or 6 percent of the workforce. Fitbit added that it will improve focus and optimize R&D and sales and marketing expenses. The company will also have to write down inventory and tooling equipment.

The larger question is whether Fitbit can retain talent and pivot more toward software and data while it drives hardware sales too. Fitbit has expanded in the enterprise and acquired Pebble. The plan is to be more of a platform that can be device agnostic. On the bright side, Fitbit has 23.2 million active users, up from 16.9 million a year ago.

It's a tough turn to pull off and Fitbit said inventory levels will take time to burn off. Ross Rubin recently noted that hardware companies don't have a lot of time to move upstream from their original creations:

Once-thriving gadget companies have been attacked by technologies popularized on the smartphones they've sought to circumvent. If they cannot push past the limits to their addressable audiences, they will have to sell more into their existing customer base to grow.

Fitbit is projecting 2017 revenue of $1.5 billion to $1.7 billion with a non-GAAP loss of 22 cents a share to 44 cents a share.

For context, Wall Street was expecting Fitbit to report 2016 revenue of $2.33 billion with $2.38 billion in sales for 2017.

Fitbit will also reset performance incentives and reprice stock options to retain talent. Fitbit co-founders CEO James Park and chief technology officer Eric Friedman will take $1 in salary.

Fitbit wants you to socialize more and get fit in the new year:

Fitbit wants you to socialize more and get fit in the new year The company added new features to help you set goals, get workout recommendations, and connect with others.