Google owner Alphabet Inc has made an offer to acquire U.S. wearable device maker Fitbit Inc, 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 Inc and Samsung Electronics Co Ltd in developing smartphones, 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 could not be learned.

Google and Fitbit declined to comment.

Fitbit shares rose 27 percent on the news, giving the company a market capitalization of 1.4 billion U.S. dollars. Alphabet shares rose two percent to 1,293.49 U.S. dollars.

Fitbit, which helped pioneer the wearable devices craze, has been partnering with health insurers and has been making tuck-in acquisitions in the healthcare market, as part of efforts to diversify its revenue stream. Analysts have said that much of the company's value may now lie in its health data.

Fitbit cut its 2019 revenue forecast in July, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite. The company is scheduled to report third-quarter earnings on November 6. 

Fitbit would not be the first deal that Google would be carrying out in the wearables space. Fossil Group Inc said in January it would sell its intellectual property related to smartwatch technology under development to Google for 40 million U.S. dollars. Google's plans for these assets are not clear.

Reuters had reported last month that Fitbit was speaking to investment bank Qatalyst Partners about exploring a sale.

Alphabet profits slip amid bigger investments

Alphabet on Monday reported a sharp drop in profits over the past quarter as it ramp up spending for the launch of a wide array of new gadgets and services.

Profit dipped 23 percent from a year ago to 7.1 billion U.S. dollars as revenue grew 20 percent to 40.5 billion U.S. dollars 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 at Google continued to be the primary money-maker at Alphabet – accounting for some 34 billion U.S. dollars in revenue.

But revenue from other sources including cloud computing climbed more than 40 percent to 6.4 billion U.S. dollars, according to an earnings report.

Alphabet has been pumping money into research and development for artificial intelligence, cloud infrastructure, and launching new Pixels smartphones and other hardware.

Research and development costs rose 25 percent from last year to 6.6 billion U.S. dollars and sales and marketing expenses were up 20 percent at 4.6 billion U.S. dollars.

Earlier this month, the company unveiled its latest Pixel handsets, which include features such as motion-sensing for gesture control and facial recognition.

(With input from AFP, Reuters)