China's LeEco backs out of Silicon Valley HQ less than a year after being hailed as "takin...

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in iPhone edited March 20
LeEco, the Chinese firm reported to be "taking on" Apple (as well as Tesla and Netflix) less than a year ago in an ambitious American expansion with new headquarters in San Jose, is now laying off employees and selling its property after running out of cash.


LeEco San Jose headquarters liquidated in cash crunch


In December, LeEco halted trading of its stock after plummeting share prices reportedly triggered margin calls for its cash-strapped billionaire founder Jia Yueting.

LeEco had been hailed as an Apple threat, with tech journalists giddy in reporting Jia's contempt for Apple--a company Jia derided as "extremely slow" and compared to the Nazis.

Reuters is now reporting that LeEco is selling the San Jose headquarters it acquired from Yahoo last year: an 80,000-square-foot facility on 49 acres of land where it planned to house 12,000 employees. By comparison, Apple expects to have a similar number of employees working in the 2.8 million square foot "spaceship" of its new Apple Park complex later this year.

A familiar Anti-Apple story of unbridled hopes and dreams

LeEco initially announced plans for American expansion less than a year ago last April, stating that "our presence here in Silicon Valley puts an exclamation point on our visionary plans."

At the time, Jia appeared on CNBC to ridicule Apple as "outdated" and portray the iPhone as having "fallen behind," specifically attacking Apple's entry priced iPhone SE as having a "very low level of technology."



LeEco was earlier profiled by the Verge for promoting its smartphones in China by attacking Apple with Nazi imagery that depicted iOS as "tyranny," as Jia wrote of the "arrogant regime of iOS domination," despite the supposed supremacy of Android in terms of unit market share. Le Pro 3 is not only half as fast as Apple's latest iPhone 7, but is also trounced in typical single core performance by the same iPhone SE the LeEco's chief executive derided as slow and old last spring

Last October, LeEco wooed the media with an event that showed off an electric car concept, Android-based TVs, VR headsets and a new $399 Le Pro 3 phone, of which Cult of Mac crowed "packs the same powerful processor as Google's new Pixel phone."

Google's HTC-built Pixel, powered by the same Qualcomm Snapdragon 821 as Le Pro 3, is not only half as fast as Apple's latest iPhone 7, but is also trounced in typical single core performance by the same iPhone SE the LeEco's chief executive derided as slow and old last spring.

Money is the root of all ability


A larger problem for LeEco than its tired, regurgitated Google talking points about "iOS Tyranny" and the advantage of platform "openness" is that LeEco began rapidly running itself out of cash. Almost immediately after it began occupying its new U.S. headquarters, Jia warned that its ambitious expansion was running short of funding in a letter to employees.

"As we sped ahead blindfolded, and expanded our business by burning cash, we got overstretched in our global strategy," Jia explained. That global strategy involves televisions, bicycles, VR headsets and slow cheap iPhone killers (below).




Last summer, LeEco announced plans to acquire low end TV maker Vizio for $2 billion after spending $250 million to buy Yahoo's site in Silicon Valley. Unsurprisingly, the same tech media sources that announced Apple Park (previously known as Campus 2) was a sign the company was overspending and probably going out of business hailed LeEco's ambitious expenditures as being a smart way to enter the U.S. market.

Last spring, LeEco told Chinese media it had 1,000 people working in the U.S. By October Jia said it had "more than 500" employees in America, according to the Reuters report. In addition to dramatically scaling back its U.S. employment, the company has also fired over 80 percent of its staff in India, where it also hoped to expand rapidly.

In addition to firing employees, LeEco has also lost a series of higher profile executives, many of whom had been hired away from other Android makers. That includes its chief marketing officer Todd Pendleton (formerly from Samsung) as well as a patent lawyer hired away from Google.



LeEco's founder Jia is also the financial backer for aspiring electric carmaker Faraday Future. In February, that affiliated firm announced it would dramatically scale back its factory plans in Nevada. Originally planned as a $1.3 billion investment building 3 million square feet of factory space capable of producing 150,000 vehicles per year, the company now intends to build a 650,000 square foot facility with capable of building around 10,000 cars per year.

LeEco echoes Xiaomi, ZTE, Oppo, Vivo

LeEco is just the latest media darling anointed by the tech media to cause great threat and concern to Apple via rapid expansions, expensive acquisitions and flashy futuristic prototypes and technology announcements.

The Wall Street Journal previously promoted China's Xiaomi as being surprisingly profitable despite its business of selling low-end phones at low prices, until it was revealed that the profit figures the newspaper published were off by an order of magnitude: Xiaomi had earned just $56 million, rather than a half billion.iPhones earned about $10 billion in China last year, almost four times more than BBK's Oppo, Vivo; Xiaomi, ZTE and Huawei combined

Last year, Eva Dou of the Wall Street Journal acknowledged that after having "raised vast sums on China's mobile-Internet boom," Xiaomi is now "facing growing pressure to live up to expectations."

ZTE, the only major Chinese smartphone maker to meaningfully enter the U.S. market, was recently hit with a $892 million criminal fine for violating sanctions and lying to investigators, erasing two years of its profits.

The fastest-growing smartphone brands in China--Oppo and vivo, both owned by BBK--are now being hailed for producing volumes of devices that exceed Apple, just as Xiaomi once did. Bloomberg just hailed the brands as having "toppled Apple in China."


Second verse, same as the first


In reality, both BBK brands only earned a combined total of 2.8 percent of global mobile profits according to Strategy Analytics, about $1.5 billion. The same report noted that Apple's iPhone earned $44.9 billion globally. About 22.3 percent of Apple's sales last year were collected in Greater China, indicating that iPhones earned about $10 billion in China last year, almost four times more than BBK's Oppo, Vivo; Xiaomi, ZTE and Huawei combined.

Largely overlooked in the report by Bloomberg claiming that BBK's founder Duan Yongping "toppled Apple in China" is the fact that "he's long been a big-time investor in Apple and an unabashed fan of its chief executive officer [Tim Cook]," and that "much of his overseas wealth remains tied up in the iPhone maker."
brakken
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Comments

  • Reply 1 of 27
    Apple is doomed because of cheaper Korean/Chinese/______  phones sold in millions in China/India/_____. .  How dare you quote real facts to contradict the mainstream media narrative?


    /Sarcasm  
    SolicalijbdragonDan Andersenwatto_cobra
  • Reply 2 of 27
    brakkenbrakken Posts: 555member
    Stupid jerk. I hope he tries again with an actual business plan, but even if he does, I'm sure TWSJ will completely miss the point. Again. 
    edited March 20 watto_cobra
  • Reply 3 of 27
    sflocalsflocal Posts: 3,612member
    Arrogant, clueless jerk.  The only expertise this snake-oil salesman had was burning through money.  Where are those asshats that hailed him as the next threat?  Conspicuously quiet aren't they?!!
    caliDan Andersenwatto_cobra
  • Reply 4 of 27
    quinneyquinney Posts: 2,478member
    Gone, like a fart in the wind.
    calirepressthisigorskyDan Andersenwatto_cobra
  • Reply 5 of 27
    jungmarkjungmark Posts: 6,323member
    Ha ha. Cocky dumbasses. All talk. 
    watto_cobra
  • Reply 6 of 27
    Success in America is not an easily transferable talent when one comes from a totalitarian government, where a person of influence and means can depend on the scale being strongly weighted in their favor. It is rare that an individual or corporation from these roots translates regime favored advantage to the real world strictures of global standards and equitably regulated society, especially when maintaining an old world ego.

    edited March 20 igorskyroundaboutnowwatto_cobraration al
  • Reply 7 of 27
    paxmanpaxman Posts: 4,380member
    quinney said:
    Gone, like a fart in the wind.
    The personification of an iPhone Killer, as we have come to know them. 
    calibrakkenigorskyDan Andersenwatto_cobrastantheman
  • Reply 8 of 27
    quinney said:
    Gone, like a fart in the wind.
    Shawshank Redemption
    watto_cobra
  • Reply 9 of 27
    calicali Posts: 2,905member
    Words can't describe how ANGRY it makes me that a talentless Steve Jobs wannabe and his company can make an iKnockoff and claim they will be a threat in the tech world while American media praises these frauds. 
    repressthisbrakkenDan Andersenwatto_cobraration al
  • Reply 10 of 27
    cali said:
    Words can't describe how ANGRY it makes me that a talentless Steve Jobs wannabe and his company can make an iKnockoff and claim they will be a threat in the tech world while American media praises these frauds. 
    The only thing I was looking forward to is the Faraday brand. They made a cool demo at CES. Too bad it was vaporware. 

    So OZ is Chinese. 
    jony0watto_cobra
  • Reply 11 of 27
    It's fine a company is attempting to compete with Apple but to label some small company just starting as "a threat to Apple" is just pure stupidity. What is the problem of these news media people? Somehow they can't seem to grasp Apple's global size, cash-flow or cash reserve. Apple is one of the wealthiest and well-known companies on the planet. Why does there always have to be some comparison to Apple or any other company for that matter. Although I'm pro-Apple I'm never happy to see some small company going out of business as it affects employees financially in a negative way. The top executives usually get big pay packages so they can easily survive after putting the entire company at high risk. "Toppling Apple in China" is one thing but to do so on a global basis is another thing entirely.
    watto_cobra
  • Reply 12 of 27
    IamcgwIamcgw Posts: 1member
    Bu Bye! Just another Chinese know-it-all who probably took a lot of investor funds and squandered all of it or sent it elsewhere. Now bailing out while the going is good.

    watto_cobra
  • Reply 13 of 27
    chasmchasm Posts: 217member
    I hate to be contrarian, but the claim that BBK "toppled" Apple in China is accurate -- if all you count are unit sales (which DED doesn't mention for China, oddly using a global figure when the claim was clearly for "in China"). Samsung "topples" Apple in lots of countries (by the same measure), because profitability is almost never factored in to such reports. When you look at profitability, the "smartphone war" is over: Apple won. It's funny how most "business" writing on smartphones consistently overlooks this, or for that matter a company's "burn" rate when they're not Apple ...
    ration al
  • Reply 14 of 27
    Cara PCara P Posts: 1unconfirmed, member
    Ignorance goes both ways, applies to both cultures as a warning. Founder is still worth 4 billion and biz is thriving in China for this firm. This company held no value over the American market, idiotic move.
  • Reply 15 of 27
    Wasn't there speculation a while back that Faraday Future was Apple-backed? Or am I mixing it up with something else?
    watto_cobra
  • Reply 16 of 27
    Saw this coming a while ago. 

    Taking on apple ply while trying to be a jack of all trades is what has failed Microsoft and google. 

    Its the the wrong strategy. 

    Better he he sticks to products "made for iOS and macOS"
    watto_cobra
  • Reply 17 of 27
    19831983 Posts: 887member
    LOL! What a douche.
    igorskyDan Andersenwatto_cobra
  • Reply 18 of 27
    Rayz2016Rayz2016 Posts: 1,593member
    "Cash-strapped billionaire"

    There's a term for the new age. 

    adm1tokyojimuroundaboutnowDan Andersenwatto_cobraration al
  • Reply 19 of 27
    thedbathedba Posts: 363member
    He wanted to take on Apple, Tesla and Netflix. 
    I think he forgot to throw in Walmart and McDonald's. That's why his strategy failed. 
    igorskywatto_cobra
  • Reply 20 of 27
    adm1adm1 Posts: 295member
    chasm said:
    I hate to be contrarian, but the claim that BBK "toppled" Apple in China is accurate -- if all you count are unit sales (which DED doesn't mention for China, oddly using a global figure when the claim was clearly for "in China"). Samsung "topples" Apple in lots of countries (by the same measure), because profitability is almost never factored in to such reports. When you look at profitability, the "smartphone war" is over: Apple won. It's funny how most "business" writing on smartphones consistently overlooks this, or for that matter a company's "burn" rate when they're not Apple ...
    I too noticed the  "global sales" comparison, it detracts from the point and any article legitimacy when the author skews things to suit an apple-bias to counter any anti-apple FUD. We're not idiots, most of us can tell BS from truth when presented with all the facts rather than just what suits a certain view or side.
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