LeEco wanted too much too fast, and its overzealousness caught up with it almost immediately. Chairman Jia “YT” Yueting has long acknowledged the company’s cash problems in the wake of its rapid growth, but while PR has tried to backtrack and otherwise spin his statements in the past, new comments this week paint an even bleaker picture of the company’s health.
During the company’s annual shareholders meeting in Bejing, the executive acknowledged that things are still tight even after $2.21 billion investment from Chinese realty group Sunac back in January. According to a transcript of the meeting obtained by Reuters, Jia called LeEco’s cash woes, “far worse than expected” — not the sort of statement of confidence shareholders were likely hoping for as the Chinese electronics maker looks to right its ship.
The investment, which included 9 billion yuan ($1.32 billion) for parent company Leshi’s unlisted entities, was a rare bright spot in a year that’s been marred by a seemingly endless string of bad news following the company’s aggressive push into major markets like the U.S. and India. From failed acquisitions to massive layoffs to abandoned property purchases, it’s hard to know where to start.
“We had thought some 9 billion yuan for the non-listed units would have been able to solve all the problems, the result obviously did not meet our expectations,” Jia explained in the meeting. “Since October, we took some measures and made some mistakes, but LeEco’s non-listed units’ finances got tighter. This is what we discovered over two-to-three months.”
The executive highlighted some moves aimed at helping ease the crunch, including further consolidation and additional funding for the company’s troubled car unit, which has been a major source of its money problems.
Last last year, the company raised $1.08 billion to build the electric car it announced in April. LeEco broke ground on a car plant late last year, but doesn’t appear to have made much headway since. Jia’s plans also have the company doubling down on its TV offerings, which has long been one of LeEco’s bedrock businesses.
Among other things, the company is suffering from a lack of focus. Over the course of 13 years, it’s transformed to what was commonly called “the Netflix of China” to the maker of everything from bicycles to VR headsets to Matt Damon movies. Stemming the bleeding is apparently going to be an even tougher task than initially expected.
We’ve reached out to the company for further comment.