Did Chinese company LeEco already go through its firework moment? After a bombastic launch into the US with smartphones, TVs and promises of autonomous car development, it went into retraction as the financial toll of its expansion hit LeEco stock in China hard.
It seems that even with a $2.2 billion cash infusion from a property firm, the company is dropping the ball on vital functions like paying its employees.
Bloomberg reports from its sources that the company delayed doling March’s end-of-the-month paychecks until today. Employees were given the explanation that there were problems moving money from China to the US. Morale has been falling off as the rank and file are getting frustrated with executives that don’t seem to understand the American market — chairman Jia Yueting is making most of the decisions and not US executives. Some of those US executives are said to have taken jobs with other companies, one of them being Samsung.
This comes on top of a default of a major Chinese soccer broadcast contract and multiple IOUs to suppliers. LeEco is also considering the sale of its Santa Clara, California, facilities. The $2 billion acquisition of US-based television-maker Vizio has hit Chinese government hurdles with currency outflow limits tightening. A source said that LeEco may reduce its involvement with Vizio to a minority stake or a partnership.
Furthermore, its autonomous car company, Faraday Future, is bleeding talent and cash. Work has stopped on a main factory in Nevada, though the company claims that it should resume “very soon”. The finance division has gone through a fresh cycle of exits and hires, all the while under Jia’s edict of spending.
Jia once told investors that parent company Leshi (LeTV) would reach market capitalization of $100 billion and urged them to bring its shares up to 100 yuan. He apologized to the Shenzhen stock exchange for making the comment after it suspended trading of Leshi stock for a day.