May 23, 2017
By Jess Macy Yu
TAIPEI (Reuters) – China’s embattled LeEco aims to cut its U.S. workforce to around 60 people from about 500 earlier this year, as the Netflix-to-Tesla-like group streamlines global operations to shake off a cash crunch, a person with knowledge of the plan said.
The cuts to its U.S. business – which sells smartphones, TV sets and TV content – are part of a strategy to rein in overseas operations, trim costs and increase focus on the home market and core online content unit after founder Jia Yueting last year said LeEco had grown too fast.
The company stretched from electric vehicles and online TV content to sports and smartphones in a little over a decade, employing 14,000 people globally as of late last year – a pace of expansion that has strained its finances.
LeEco did not immediately respond to requests for comment.
The firm, headed by founder Jia Yueting, has been scaling back in the United States and other overseas markets, selling property in Silicon Valley and pulling out of a deal to buy U.S. TV maker Vizio Inc
It has also made cuts to its LeSports unit and to operations in India. Jia told reporters on Sunday the firm needed the cuts to remove low-efficiency workers, especially from non-listed businesses.
Jia as recently as last year said he hoped to employ 12,000 people at a new headquarters in the U.S. But in November, he said the firm was facing “big company disease” and struggling with a shortage of cash.
The person with knowledge of the job cut plan said the U.S. cuts were part of a strategy to pull back from global markets and focus on domestic businesses and core units such as TV content. However, businesses such as smartphones and sports could face major cuts, the person said.
“They will focus more on China. What they say about focusing on listed units, that’s pretty much what’s going to happen,” the person said. “If you’re looking for trends to follow in the future, you’ll probably see a continued focus on the TV business.”
The person said the time frame for the U.S. cuts was unclear, and could impact senior personnel.
“If the company does not right itself, then I think you can see the company will have a complete management shake-up, including (Jia) Yueting’s core team.”
On Sunday, the firm said Jia will step down as chief executive of LeEco’s core listed unit Leshi Internet Information & Technology Corp Beijing <300104.SZ>, ceding control of the most profitable part of the business empire.
(Reporting by Jess Macy Yu; Writing by Adam Jourdan; Editing by Christopher Cushing)
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