Right on the heels of announcing their expansion into the US market with the debut of the Le Pro 3 in the United States, Chinese billionaire Jia Yueting has sent a troubling letter to LeEco employees about the state of the company. LeEco is not just another smartphone manufacturer from China like Huawei or Xiaomi, rather it’s an umbrella of businesses that include automobiles, TVs, sports media, and smartphones.
The company’s rapid expansion that is mentioned in the chairman’s letter is likely referring to the recent acquisition of an electric car plant in Nevada and the $2 billion acquisition of Vizio.
Bloomberg managed to get a copy of the letter, in which Jia Yueting states that the company “blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited.”
The two companies that Jia serves as chairman with immediately saw a decrease in their stock value once word of the letter spread. What this means for the company’s expansion into the US market is unclear, as LeEco is still offering the flash deals advertised on their products, including the $299 Le Pro 3.
Part of the memo did outline the cost-cutting programs that will go into effect in order to manage the company’s ballooning debt, including decreasing subsidies for new customers and focusing on their existing businesses, rather than continually moving into new areas.