China's LeEco to sell Silicon Valley site amid cash crunch
- Author: Arturo Norris Mar 20, 2017,
Mar 20, 2017, 13:43
Sources claim that LeEco is making such a move due to the ongoing financial troubles of the company, with the painful cash crunch now sidelining LeEco's lofty goals that include overtaking Tesla in the business of premium electric cars. The firm, which has had its sites set on a broad range of businesses from electric cars to streaming video, bought the property for $250 million previous year from Yahoo Inc., Reuters said.
LeEco's CEO, tech billionaire Jia Yueting, said at the time that the old Yahoo site would be "an EcoCity that houses 12,000 employees". The Genzon Group has confirmed that the site's sale is now under negotiation.
We already knew that LeEco is experiencing a cash crunch, as its CEO admitted this in a letter to staff back in November.
But less than a month prior to the letter, amid much fanfare at LeEco's official USA launch at the Palace of Fine Arts in San Francisco, Jia had outlined plans to build its North America headquarters at the Silicon Valley site.
Genzon also declined to elaborate on why it was interested in the property, but according to its website, the Shenzhen-based firm founded in 2003 is erecting a 140,000-square metre office building in Silicon Valley in a project called Burlingame Point - its first in the United States.
LeEco, meanwhile, did not admit that it is looking to sell the land, claiming that it is still only in the initial planning phase on what to do with the property and that the company is still looking for a development partner.
According to the sources, the LeEco US workforce has been downsized with estimations that the numbers have been at least halved in their current office in Silicon Valley alone.
LeEco apparently expanded at a rapid rate a year ago and it seems that their rate of expansion has failed to match up with its revenue scale. In October, Jia said the company had more than 500 employees working in the US. The firm refused to comment on the employee number giving the reason that the headcount keeps changing due to additions and or departures.
After being plagued by several months of financial woes, LeEco in January landed a 16.8 billion yuan (US$2.24 billion) round of investment from Chinese property developer Sunac China Holdings, which injected fresh funds into LeEco's entertainment and hardware businesses.
The expensive dream of developing luxury electric vehicles by LeEco uses Faraday Future technology, which is a startup in United States funded and controlled by Jia.
Shares of LeEco's flagship unit Leshi Internet Information and Technology Corp Beijing have plunged around 25 percent over five months.