LeEco Announces Massive U.S. Layoff
UPDATE! The future of Chinese tech giant LeEco’s ambitious plan to conquer the United States and the rest of the world through a consumer electronics/streaming services ecosystem play got a lot more complicated Tuesday.
LeEco officially announced that it had laid off 325 U.S. employees, after failing to raise needed capital funding.
“The breadth of our business model is capital intensive, and our leadership has been working to secure the appropriate level of funding for the U.S.,” LeEco said in a company statement Tuesday afternoon. “While we’ve made progress in growing our distribution channels, the challenges with raising new capital have made it difficult in the past few months to support all of our business’ priorities. As a result, the capital we do have will have to be highly focused resulting in a significant restructuring and streamlining of our business, operations and workforce. This will impact approximately 325 people in the U.S.
“We believe that our vision to remove the barriers between screens for consumers is right, and analysts have acknowledged this. Because we can’t access the capital needed at this time, we will need to take a phased approach to the U.S. market.”
“We will continue to operate in the U.S. with our existing product portfolio that puts content at the heart of the experience, and we believe that our products can compete,” the company said.
LeEco said it remains committed to the U.S. and will continue supporting consumers. The company said that last week it finalized a plan on-shoring up a customer care call center in order to enhance the customer experience for U.S. consumers.
“Our goal is to continue to gain momentum,” the company continued. “In the past few months, we have gained a large foothold in Chinese-speaking households in the U.S. by offering tailor-made products and content for this community. We believe this provides us an opportunity to build on our strengths and grow from there.”
According to Bloomberg the company is left with just 50 workers here.
Read more about LeEco’s layoff after the jump:
The layoffs are the next in a chain of problems that have plagued the China-based company since it staged an international press and Web conference last October. It was then that LeEco unveiled an elaborate wide-ranging plan to create an electronics hardware and services business ecosystem around the world.
One of the first steps in that initiative was to acquire controlling interest in U.S. television vendor Vizio for $2 billion to sell televisions and other devices along with its own branded LeEco models in and outside of North America.
The consumer electronics hardware, which was to be heavily subsidized by the company to reach low selling prices, was intended to carry its apps and streaming services, along with those of others, to generate on-going revenue from content sales, subscriptions, revenue sharing and advertising.
But that acquisition ultimately failed to be consummated allegedly after the Chinese government denied approvals on large cash transfers out of the country at a time when the country’s economy was experiencing a slowdown.
LeEco also had plans to tie its streaming and communications services into an array of other devices, like smartphones, virtual reality gear and even electric cars and bicycles. But few of those items had any real time to generate growth or momentum in the Western marketplace.
Indeed, LeEco had just started to spread its distribution base among regional and national electronics retail chains and e-commerce outlets, and was shipping an aggressively priced 85-inch 4K Ultra HDTV with full-array LED backlighting.
LeEco also had entertainment development interests which invested in several feature films that appeared in Western theaters, including the recent disappointing U.S. theatrical run of “The Great Wall”, starring Matt Damon.
The slow starts in so many sectors of its operation at the same time caused LeEco to miss revenue targets by a wide margin leading to the job cuts, Bloomberg said.
Additionally, this week, the company said that chairman and CEO Jia Yueting (pictured at top) was giving up his role in China as CEO of the company’s flagship video service while LeEco begins a restructuring plan that will realign its disparate business units under the main listed company.
By Greg Tarr
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