Chairman of LeEco Confirms They are Running Out of Cash
LeEco has been working hard to expand their company beyond China over the last few years. We’ve watched as they announced a major expansion throughout India, which was then followed by the launch of their entertainment services in India. The company hired some former Samsung executives for its North American division, opened up their headquarters in the United States, and then purchased 48.6 acres of land from struggling Yahoo.
LeEco then teased that they had something big in store for the United States this fall, which turned out to be the official launch of multiple products within the country. LeEco even went as far as to acquire the TV company VIZIO as a way to get their media streaming services to more homes. It is no secret that LeEco has been working hard, but now it seems the company has been working a little too hard for its own good.
This week, Bloomberg reports that LeEco is running out of cash to “sustain a headlong rush” into the multiple markets they are a part of (electric cars, smartphones, smart bikes, media streaming, TVs, etc.). Jia Yueting, the co-founder of LeEco wrote a letter to his employees and investors to apologize for what has happened. In an attempt to remedy the situation, he has agreed to decrease his income to 1 yuan (15 cents), slow the company’s expansion plans, and put in place plans for the company to grow at a more moderate pace.
It’s unclear what the future holds for LeEco at this time. We could see them slow everything down and release fewer products, or we could see them try and produce more as they attempt to inject some additional cash into the company. At this time, the only thing that is known is that the company is unable to continue to expand at the rate they were, and these expansion plans are being slowed down due to a cash crunch.Source: Bloomberg