LeEco has been projecting an image of success, after a grand debut in USA at the end of October, marked by a sparkling event, filled with electric cars, VR headsets and smartphones. Now we’re hearing that the company is not doing so well, on account of its cash running out.
Jia Yueting, the company’s cofounder and chairman has admitted that the firm has spent too much and went too far too fast. The company has been rushing from one segment to the other over the past years, first acting in the video streaming segment, then the smartphone biz, TV sets and electric cars. Jia Yueting sent a long letter to shareholders and employees, apologizing for the state of the firm’s finances.
He’s also ready to slash his income to just 15 cents and slow the pace of expansion to get things back on track. LeEco has been spending a lot over the past year, including $2 billion to acquire TV maker Vizio, plus money for one of Yahoo’s former campuses, ready to host thousands of its employees. Then there’s the investment in electric cars and of course the smartphones sold at a loss.
As Jia Yueting’s business is not doing fine, the stock value of the firm dropped and so did the stock value of Coolpad, where the billionaire is also a board member. Xiaomi’s cofounder, Lei Jun wants more info on LeEco’s financial status, after the firm has been shrouded in secrecy for a while now, even claiming they’re in serious debt.
What’s clear is that cost cutting is needed and that the US debut could have waited a bit.