LeEco has been having trouble in raising fresh funds after a series of fast-paced acquisitions. (Photo : Getty Images)
After sealing an array of new ventures for the past couple years, LeEco, one of China's fastest-growing tech companies, is now facing serious financial problems.
In a letter addressed to employees, LeEco co-founder Jia Yueting admitted that his cash-strapped company is struggling to score fresh funds after a series of acquisitions that pushed the company to "move too fast."
"The pace of LeEco's strategic development is moving too fast," said LeEco founder Jia Yueting.
In the letter, Jia said that his company had issues with its handset supply chain, which in turn hurt LeEco's mobile phone business.
"No company has had such an experience, a simultaneous time in ice and fire," Jia wrote in the letter first obtained by the Global Times and later reported by Bloomberg News.
"We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited," Jia said.
LeEco shot to international fame when it announced its acquisition of Vizio Inc. for $2 billion. The company, whose ventures extend to automobiles and sports media, is also known for producing cheap smartphones.
Clouds of doubts have been hounding LeEco's expansion plans.
"The company spread itself too quickly. They have a big ambition to create an ecosystem for different devices, not only for phones and TVs and set-top boxes but for vehicles," Gartner's research director Sandy Shen told Bloomberg.
"They have a big ambition that is too big to swallow at this moment," Shen added.
LeEco's stock price has plunged since the start of the year. Meanwhile, shares of Leshi Internet Information & Technology Corp. dropped almost 5 percent on Monday after the letter was released.
Leshi is responsible for LeEco's online video streaming site.
In his letter, Jia pledged to cut his salary to 1 yuan and curb the company's pace of growth.
