Flash in the Pan LeEco, who Likened Apple to Hitler, Lost Millions on Smartphones and is Dire Cost Cutting Mode
In March 2015 an insane Chinese Android OEM by the name of LeEco likened Apple to Hitler in a smartphone ad using images that you can see in our story's cover graphic. Their reckless, irresponsible ego maniac CEO struck out at Apple by saying that "Apple's approach to the smartphone industry is stifling innovation and harming the interests of users." Considering that iPhone 6 mania had had swept the globe and crushed Samsung and every smartphone OEM in China, the backlash against Apple was the reaction of a nationalist gone crazy.
Even though the backlash against LeEco instantly forced LeEco's CEO Jia Yueting to apologize, he was back a month later on CNBC saying in an interview that Apple is outdated.
Flash forward to now and outdated Apple just came off of six straight quarters of taking a whopping 91% of smartphone industry profits with the highest Android OEM Huawei taking a measly 2%. Where was LeEco and their great innovative Android smartphone? Ha! – who knows because they don't register anywhere on the planet that matters. But we'll touch on that a little later in the report. Yet one thing is for sure, big mouth Yueting's company is in deep financial trouble.
The Wall Street Journal reported a week ago that "The listed unit of LeEco Holdings called 'Leshi Internet Information & Technology Corp.,' founded by Chinese billionaire Jia Yueting, said it is planning changes to its business following a slide in share price that forced the fast-growing tech company to halt trade on the stock market.
"To protect the interests of the company and of many investors, the company needs to halt trade and investigate these matters," Leshi said in their financial filing."
Mr. Jia wrote in the letter to employees that said: 'As we sped ahead blindfolded, and expanded our business by burning cash, we got overstretched in our global strategy.'
Leshi, which is LeEco's only profitable business unit, said in the filing that it will resume trade after investigating the stock-price decline and making some strategic decisions."
In a newly published report today from Beijing, Jia Yuemin, vice president of the group's holding company Le Holdings, and an older brother of the company's founder and CEO Jia Yueting, revealed the company's restructuring blueprint.
Yuemin noted that "LeEco has entered its second phase of growth from the previous expansion phase.' Instead of aggressive expansion, further noted that the company's goal in the second phase is to rein the business in and be more profit-oriented.
"We were hoping to tap into broader markets, but considering the current situation, it is better off focusing on structural adjustment," he said. Delaying an earlier plan, "LeEco will not tap into a new sector for the next five to 10 years -- at least not for five years." That sounds like the bankers put the big squeeze and handcuff's on their run amuck CEO.
LeEco will now focus on cost-cutting. "We will lay off about 10% of our workers," said Jia. Currently there are 13,000 to 14,000 across the world working for LeEco.
Their VP then drifting into a delusional side step saying that they will surpass Samsung electronics in TVs within a couple of years. While I'm not a fan of Samsung, their takeover of Visio isn't likely to beat Samsung, especially in profits or on the high end of TVs.
Now, back to LeEco's oh-so-great smartphone that was to overtake the iPhone in China. Today's Beijing report notes that buoyed by the success of their YouTube like video service, the company quickly expanded into smartphones. However, this business has been disappointing. Filings by the holding company in May revealed its net loss last year widened to 174.49 million yuan ($25.3 million), from 17.53 million yuan from a year ago.
Jia blamed the company's smartphone losing venture to a cash crunch. "The pace of expansion was too fast, so our supply chain capability couldn't catch up with the speed." To cut costs, the company will sell its smartphones via its 10,000 TV sales outlets in China.
Apple crushed LeEco and every Android smartphone maker on the planet when it came to profits this year. LeEco's brash and insulting CEO couldn't persuade the smart Chinese youth to leave Apple's hot iPhone for a losing brand. And the so-called 'outdated Apple' is still one of the most valuable technology companies on the planet run by executives who understand how to make killer profits year in and year out and still hold sway to have loyal customers stand around the block to get their hands on the next new iPhone. That's sure better than having bankers lining up at the company's door wanting to be paid, wouldn't you say?
LeEco: What a loser.