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LeEco confirmed on Tuesday that it will lay off the bulk of its U.S. workforce, as CNBC first reported Monday evening. According to CNET, the company is cutting 325 employees, or 70 percent of its workforce. LeEco did not immediately respond to CNBC's request for comment.
LeEco, once referred to as the "Netflix of China," made its debut in the United States last October with a flashy press conference where it announced new smartphones and televisions, which hit retail stores such as Best Buy and Amazon shortly thereafter.
LeEco made other promises, too, like to eventually launch an electric bicycle in the U.S. The company's strategy was simple enough: to sell relatively high-end products at low prices while providing streaming video content from media partners. It quickly ran into problems, however. Expansion plans were eventually put on hold, employees noticed delayed paychecks and, earlier this week, CEO YT Jia stepped down.
Sources told CNBC the company held Town Hall meetings in three separate U.S. office locations on Tuesday at 10 a.m. where executives spoke to staff.
Ren "Richard" Hongliang, the CEO of LeEco North America, spoke at the San Jose Town Hall where he informed employees of the reduced headcount.
Executives apologized during the Town Hall meeting, one source said, where the company tried to get employees to "remember the good times," and discussed a new "LeEco 2.0" strategy. A source previously told CNBC that LeEco would focus on targeting Chinese-speaking households, which the company confirmed to CNET.
Sources said employees were then split into separate departmental meetings, where they learned their individual fates.
Most already expected what was coming, however. One source said LeEco processed PTO payouts last night, an early warning sign of what was to come. Some employees are frustrated by empty promises of equity in the company, one source said, leaving them feeling cheated.