Jia Yueting, chief executive officer of LeEco Global Group, poses for a picture at the company's headquarters in San Jose, California. (Photo : Getty Images)
Cash-strapped LeEco is suffering another blow as China handset maker Coolpad, in which it is the biggest shareholder, announces a surprising sales slump.
Coolpad blamed the lowered sales projection on "fierce competition in the domestic smartphone market," the BBC reported.
LeEco is Coolpad's largest shareholder, after having raised its stakes to 28.9 percent in June. After its announcement, Coolpad saw its shares plunge by almost 10 percent, further hurting LeEco's position in the market.
Earlier this month, LeEco chairman and co-founder Yueting Jia told shareholders and employees in a letter that the company was struggling to secure fresh funds after undergoing a series of acquisitions and other expansion plans.
"No company has had such an experience, a simultaneous time in ice and fire," Jia said in a letter, obtained 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 also announced that he would be cutting his salary to 1 yuan and moderating his company's pace of growth.
Meanwhile, Coolpad's stock hit a four-year low following the disappointing 43 percent sales crash for the first 10 months of 2016. The company estimates a $386.8 million loss for the whole financial year.
Coolpad and LeeCo's partnership peaked at the release of the Cool1 Dual handset in August. The unit incorporates a 13MP dual-camera on the back, a feature that was seen to rival Huawei's P9.
But with the ever-growing competition against other mobile phone makers such as Oppo, Vivo and Huawei, the Cool1 Dual smartphone failed to impress in the sales race.
"Chinese manufacturers used to be able to rely on their home market to give them unprecedented scale," Ben Wood from tech consultancy firm CCS Insight told the BBC.
"However, this year the Chinese market has plateaued and we are starting to see some of the casualties as a result," Wood added.
