Chinese technology conglomerate LeEco said it plans to eliminate about 325 jobs in the U.S. and sharply reduce R&D operations, after struggling to raise funds and attract the consumers needed for its ambitious global vision.
The job cuts affect all of the company’s departments, but especially the research-and-development team, according to the company. The San Diego office, which employed primarily people working in R&D, is closing and employees left at the whittled-down U.S. business will focus on servicing customers who have already purchased LeEco devices. The restructuring will reduce the headcount to about 50 people, according to a person familiar with the matter.
The company, which had leveraged the success of its online video business in China to expand into new businesses, continues to suffer from an executive exodus. Rob Chandhok, a former Qualcomm Inc. executive who runs LeEco’s North American R&D, and Chief Revenue Officer Danny Bowman, a former Samsung Electronics Co. executive, are both leaving. Bob Ye, vice president of LeEco’s North American smart devices, will be in charge of the go-to-market strategy.
“The challenges with raising new capital have made it difficult in the past few months to support all of our business’ priorities,” LeEco said in a statement Tuesday. “As a result, the capital we do have will have to be highly focused resulting in a significant restructuring and streamlining of our business, operations and workforce.”
LeEco will continue to sell its smartphones, smart TVs, TV set-top boxes and accessories in the U.S. But after the downsize, marketing efforts will be focused on the Chinese language community in the U.S.
“In the past few months, we have gained a large foothold in Chinese-speaking households in the U.S. by offering tailor-made products and content for this community,” according to the company. “We believe this provides us an opportunity to build on our strengths and grow from there.”
The job cuts sharply scale back the company’s visions in North America, where it made a splashy debut in October. At the time, LeEco showed off an array of products it planned to sell in the U.S., including virtual reality goggles and electric bikes. Bloomberg News reported in April that it missed revenue targets by a wide margin and was planning major staff reductions.
The troubles extend far beyond LeEco’s U.S. operations. This week, the company announced that billionaire Jia Yueting would relinquish the day-to-day running of his flagship video service Leshi Internet Information & Technology Corp., while parent company LeEco considers an internal overhaul that will group businesses from entertainment to TVs under its main listed company. The internet giant has grappled with fund-raising difficulties and unpaid bills in past months, a cash squeeze exacerbated by rapid expansion beyond online video into costly areas from sports broadcasting and electric cars to online finance.
Jia’s efforts to establish a foothold in the U.S. have already faltered. A proposed $2 billion acquisition of California TV maker Vizio Inc. was scrapped in April. That deal was intended to create a beachhead for branding and acquiring U.S. customers. The U.S. operation has also suffered from an exodus of executives and growing frustration amid rounds of layoffs and delayed payroll.
By Selina Wang