Update: LeEco announced that it will lay off 325 employees in the U.S., citing a lack of funding. The company will now focus on delivering content to Chinese-speaking households in the U.S. In a statement, LeEco said:
The capital we do have will have to be highly focused resulting in a significant restructuring and streamlining of our business, operations and workforce. This will impact approximately 325 people in the U.S.
Our goal is to continue to gain momentum. In the past few months, we have gained a large foothold in Chinese-speaking households in the U.S. by offering tailor-made products and content for this community. We believe this provides us an opportunity to build on our strengths and grow from there.
Original story follows:
LeEco's debut in the U.S. didn't go according to plan, and it looks like the company is gearing up for a round of massive layoffs. Earlier this week, LeEco founder Jia Yueting announced he would step down as CEO of Leshi Internet Information & Technology Corp Beijing, the company's publicly listed unit.
Anonymous sources confirmed to CNBC that the Chinese company will lay off over 85% of its U.S. workforce at townhall meetings scheduled at its offices across the country:
Two people told CNBC the company is planning massive layoffs in the U.S., with one source saying that only 60 employees will be left after the cut. The company's current headcount in the U.S. is over 500, according to this person.
CNBC obtained an email calling employees together for a Town Hall Meeting that will occur in three of the company's U.S. locations, including San Diego, Santa Monica and San Jose, at 10 a.m. PST. The email asks employees to attend unless they're off for the day, in which case they're asked to call in.
According to the publication, LeEco will turn its attention to getting "Chinese-American consumers to watch LeEco's Chinese content library" in the U.S. As for Yueting, he'll continue to be the chairman and CEO of LeEco, but Leshi will be run by former Lenovo executive Liang Jun. Yueting said that the restructuring will improve "the listed company's performance," freeing up his resources to focus on "governance, strategic planning and core product innovation" of LeEco.
Most of LeEco's troubles stemmed from its expansion to the U.S. The resulting cash crunch has led to a series of layoffs in global markets including India, and delayed payments to staff in the U.S.. The company picked up a $2.4 billion investment at the start of the year, but its bid to acquire Vizio fell through.