LeEco has requested its employees to attend a town hall meeting on Tuesday morning, with layoffs expected to be announced during the event. This information was given to CNBC by two separate sources within the company. In an internal email, the tech company has requested its employees to attend the meeting that will take place in all three of LeEco’s US offices, which are found in San Diego, Santa Monica, and San Jose. A source familiar with the situation stated that the layoffs will happen within the next few days, and from around 500 US-based employees, only around 60 staff members will be retained. This number is far worse than the initial reports which claimed that only a third of the US staff will be retrenched. The layoffs will certainly impact its capacity to compete in its current target markets, especially against bigger and better-financed competition.
Aside from retrenching staff members, it is also reported that LeEco will veer away from selling hardware and return to its roots as a streaming platform. In its new action plan, LeEco is expected to start marketing its streaming platform to Americans of Chinese descent. LeEco hopes that its platform will appeal to this niche market due to its long list of Chinese video content. While it will do away with most of its hardware offerings, LeEco is still interested in electric automobiles and is expected to retain its investment in Faraday Future.
The massive staff retrenchment in LeEco’s US offices is a part of the widespread efforts of the tech company to return to profitability and improve its financial standing. The company’s founder Jia Yueting admitted that the company expanded too rapidly despite the limited resources and capital available to the company. In efforts to improve its finances, the company sold real property in China and the United States, asked for additional funding from investors, and retrenched staff in China and other countries. It has also taken a more disciplined approach in overseas expansion. An example of this approach is the company’s focus on the rapidly expanding smart TV market in India. Whether these efforts suffice to make the company profitable again, only time will tell.