LeTV's U.S. revenue is much lower than expected 1/3 job cuts
Bloomberg quoted sources as saying that LeTV's 2016 US market revenue was far below expectations, and the company is planning to lay off more than 1/3 in the United States. This shows that LeTV's plan for the US market will shrink significantly.
Due to poor revenue conditions and tight cash flow, LeTV CEO Jia Yueting is shrinking LeTV's global expansion plan. Last October, LeTV held a grand press conference in San Francisco and entered the North American market with high profile. At the press conference at that time, LeTV showed a series of products, including high-definition televisions, mobile phones, virtual reality devices and electric bicycles. However, according to sources, after the October conference, LeEco's revenue in the United States last year was less than $ 15 million, far below the original target of $ 100 million.
So far, LeTV's products sold in the United States include televisions, smartphones and some accessories. According to the news, LeTV America also plans to lay off about 175 people, reducing the total number of employees to about 300.
LeTV declined to comment on the news.
On Monday, LeEco said that due to regulatory hurdles, the company has given up its $ 2 billion deal to acquire US television maker Vizio. The failure of this transaction also means that LeEco will further shrink the US market plan. The two companies said that as an alternative, they will cooperate to bring Vizio's products to the Chinese market and integrate LeTV's content into the Vizio platform.
LeTV is not familiar with the US market. At the same time, the company also suffered from tight cash flow. Executive departures and layoffs have further aggravated external concerns about LeTV ’s future prospects in the United States. Earlier this month, LeEco USA delayed the payment of employee salaries. According to former and current employees, managers from China lacked understanding of the US market, which frustrated many US employees.
At last year's press conference, Jia Yueting said that LeTV has more than 500 employees in the United States, and continues to recruit new employees every week. In addition, LeEco purchased 49 acres (about 198,000 square meters) in Santa Clara, California from Yahoo, and plans to build an office park that can accommodate up to 12,000 employees. But sources said that this plan has now been abandoned.
After experiencing rapid expansion, Jia Yueting admitted in an email to employees late last year that LeEco encountered difficulties in financing. Some suppliers said that LeEco defaulted on payment and the company also gave up the right to broadcast certain sports events.
Currently, LeEco has approximately 475 employees in the United States. These employees are located in San Jose, California. According to sources, LeTV has planned a new round of layoffs for several months, but the specific timing of the layoffs depends on when the company can raise enough funds to pay employees' compensation for leaving.
After LeTV announced its entry into the United States, analysts suspected that the company may have difficulty copying its business model to markets outside China where brand awareness is low. LeTV's aggressive international expansion strategy is very different from China's Internet giants Baidu, Alibaba and Tencent. These companies have adopted a gradual strategy to enter the US market, established small-scale offices in Silicon Valley, and focused on investing in US startups.
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