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Cash crunch forces LeEco to sell Silicon Valley property

LeEco CEO Jia Yueting admitted that the firm is facing a 'big company disease'

Reuters  |  Hong Kong 

File photo of a LeEco store in China. Photo: Wikipedia
File photo of a LeEco store in China. Photo: Wikipedia

Chinese conglomerate is looking to sell a 49-acre less than a year after buying it from Yahoo, sources said, in what is the latest effort by the firm to ride out a cash crunch.

LeEco, one of China's most ambitious that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years, is struggling to support its goals that include beating Elon Musk's Tesla Motors in premium electric vehicle making.

LeEco's billionaire founder and CEO Jia Yueting admitted in a letter to staff in November that the firm was facing a "big company disease" and battling a cash crunch after expanding at an unprecedented rate.

But less than a month prior to the letter, amid much fanfare at LeEco's official launch at the Palace of Fine Arts in San Francisco, Jia had outlined plans to build its North America headquarters at the site.

"This will be an EcoCity that houses 12,000 employees," Jia said at the time.

Now cash-strapped and struggling to repay a pile of debts to suppliers and business partners, plans to sell the site to little-known Chinese developer Genzon Group for $260 million, $10 million more than what the firm paid for it in June, said a source with direct knowledge of the deal who did not want to be named due to rules on talking to media.

Genzon confirmed it was in talks to buy the site, but declined to comment on the deal size or whether it was teaming up with any partners as the discussions were still ongoing.

Genzon also declined to elaborate on why it was interested in the property, but according to its website, the Shenzhen-based firm founded in 2003 is erecting a 140,000-square metre office building in in a project called Burlingame Point - its first in the United States.

LeEco, in an emailed response to Reuters on the sale talks, said it was "working on securing a development partner" but that it was unable to share any further details.

"We are not yet ready to share plans for the land as we are still in the initial planning phase."

Headcount changes

According to sources in and outside the company, workforce has been downsized across US, with some estimating numbers had at least halved in its current office alone. Jia, in October, said employs "more than 500".

was cited by Chinese media as saying in May last year that the company had 1,000 employees in the United States, including research personnel for its "super car".

The firm on Friday declined to comment on these reports or its current employee number. It is company policy not to quote numbers upon request as "headcount changes routinely due to additions and/or departures", said.

has seen headcount reduction in various units of its business in since its financial problems deepened. The company said earlier this month that it had also cut almost 80 percent of its workforce in India.

Jia in January said LeEco's financing problems would be solved in three to four months, before the firm got a much-needed capital injection of $2.2 billion from developer Sunac Holdings.

But the Sunac investment was for LeEco's entertainment units and not its car-making business, which analysts say is very expensive to sustain.

is developing luxury electric vehicles with Faraday Future in the United States, a startup Jia funds and controls.

However, the outlook remains unclear after Faraday said it was scaling back production plan at a factory it has yet to build in Nevada.

Shares of LeEco's flagship unit Leshi Internet Information and Corp Beijing have plunged around 25 percent over five months.

 

 

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Cash crunch forces LeEco to sell Silicon Valley property

LeEco CEO Jia Yueting admitted that the firm is facing a 'big company disease'

LeEco CEO Jia Yueting admitted that the firm is facing a 'big company disease'

Chinese conglomerate is looking to sell a 49-acre less than a year after buying it from Yahoo, sources said, in what is the latest effort by the firm to ride out a cash crunch.

LeEco, one of China's most ambitious that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years, is struggling to support its goals that include beating Elon Musk's Tesla Motors in premium electric vehicle making.

LeEco's billionaire founder and CEO Jia Yueting admitted in a letter to staff in November that the firm was facing a "big company disease" and battling a cash crunch after expanding at an unprecedented rate.

But less than a month prior to the letter, amid much fanfare at LeEco's official launch at the Palace of Fine Arts in San Francisco, Jia had outlined plans to build its North America headquarters at the site.

"This will be an EcoCity that houses 12,000 employees," Jia said at the time.

Now cash-strapped and struggling to repay a pile of debts to suppliers and business partners, plans to sell the site to little-known Chinese developer Genzon Group for $260 million, $10 million more than what the firm paid for it in June, said a source with direct knowledge of the deal who did not want to be named due to rules on talking to media.

Genzon confirmed it was in talks to buy the site, but declined to comment on the deal size or whether it was teaming up with any partners as the discussions were still ongoing.

Genzon also declined to elaborate on why it was interested in the property, but according to its website, the Shenzhen-based firm founded in 2003 is erecting a 140,000-square metre office building in in a project called Burlingame Point - its first in the United States.

LeEco, in an emailed response to Reuters on the sale talks, said it was "working on securing a development partner" but that it was unable to share any further details.

"We are not yet ready to share plans for the land as we are still in the initial planning phase."

Headcount changes

According to sources in and outside the company, workforce has been downsized across US, with some estimating numbers had at least halved in its current office alone. Jia, in October, said employs "more than 500".

was cited by Chinese media as saying in May last year that the company had 1,000 employees in the United States, including research personnel for its "super car".

The firm on Friday declined to comment on these reports or its current employee number. It is company policy not to quote numbers upon request as "headcount changes routinely due to additions and/or departures", said.

has seen headcount reduction in various units of its business in since its financial problems deepened. The company said earlier this month that it had also cut almost 80 percent of its workforce in India.

Jia in January said LeEco's financing problems would be solved in three to four months, before the firm got a much-needed capital injection of $2.2 billion from developer Sunac Holdings.

But the Sunac investment was for LeEco's entertainment units and not its car-making business, which analysts say is very expensive to sustain.

is developing luxury electric vehicles with Faraday Future in the United States, a startup Jia funds and controls.

However, the outlook remains unclear after Faraday said it was scaling back production plan at a factory it has yet to build in Nevada.

Shares of LeEco's flagship unit Leshi Internet Information and Corp Beijing have plunged around 25 percent over five months.

 

 

image
Business Standard
177 22

Cash crunch forces LeEco to sell Silicon Valley property

LeEco CEO Jia Yueting admitted that the firm is facing a 'big company disease'

Chinese conglomerate is looking to sell a 49-acre less than a year after buying it from Yahoo, sources said, in what is the latest effort by the firm to ride out a cash crunch.

LeEco, one of China's most ambitious that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years, is struggling to support its goals that include beating Elon Musk's Tesla Motors in premium electric vehicle making.

LeEco's billionaire founder and CEO Jia Yueting admitted in a letter to staff in November that the firm was facing a "big company disease" and battling a cash crunch after expanding at an unprecedented rate.

But less than a month prior to the letter, amid much fanfare at LeEco's official launch at the Palace of Fine Arts in San Francisco, Jia had outlined plans to build its North America headquarters at the site.

"This will be an EcoCity that houses 12,000 employees," Jia said at the time.

Now cash-strapped and struggling to repay a pile of debts to suppliers and business partners, plans to sell the site to little-known Chinese developer Genzon Group for $260 million, $10 million more than what the firm paid for it in June, said a source with direct knowledge of the deal who did not want to be named due to rules on talking to media.

Genzon confirmed it was in talks to buy the site, but declined to comment on the deal size or whether it was teaming up with any partners as the discussions were still ongoing.

Genzon also declined to elaborate on why it was interested in the property, but according to its website, the Shenzhen-based firm founded in 2003 is erecting a 140,000-square metre office building in in a project called Burlingame Point - its first in the United States.

LeEco, in an emailed response to Reuters on the sale talks, said it was "working on securing a development partner" but that it was unable to share any further details.

"We are not yet ready to share plans for the land as we are still in the initial planning phase."

Headcount changes

According to sources in and outside the company, workforce has been downsized across US, with some estimating numbers had at least halved in its current office alone. Jia, in October, said employs "more than 500".

was cited by Chinese media as saying in May last year that the company had 1,000 employees in the United States, including research personnel for its "super car".

The firm on Friday declined to comment on these reports or its current employee number. It is company policy not to quote numbers upon request as "headcount changes routinely due to additions and/or departures", said.

has seen headcount reduction in various units of its business in since its financial problems deepened. The company said earlier this month that it had also cut almost 80 percent of its workforce in India.

Jia in January said LeEco's financing problems would be solved in three to four months, before the firm got a much-needed capital injection of $2.2 billion from developer Sunac Holdings.

But the Sunac investment was for LeEco's entertainment units and not its car-making business, which analysts say is very expensive to sustain.

is developing luxury electric vehicles with Faraday Future in the United States, a startup Jia funds and controls.

However, the outlook remains unclear after Faraday said it was scaling back production plan at a factory it has yet to build in Nevada.

Shares of LeEco's flagship unit Leshi Internet Information and Corp Beijing have plunged around 25 percent over five months.

 

 

image
Business Standard
177 22