Embattled Leshi, ‘China’s Netflix’, says it may have lost US$1.8 billion in 2017
The video streaming company says declining revenues from subscriptions and terminals are behind the loss, while other group companies still owe it some US$1.2 billion
Leshi Internet Information and Technology, or Le.com, the Shenzhen-listed arm of embattled Chinese conglomerate LeEco, said it may have lost 11.6 billion yuan (US$1.83 billion) in 2017 as subscription and advertising revenues fell.
The video streaming company, once dubbed “China’s Netflix”, made a profit of 554.7 million yuan a year earlier, but has struggled along with its parent company LeEco after an over-aggressive expansion plan left the group cash-strapped. Various other entities in the group controlled by LeEco’s founder, Jia Yueting, owe Leshi some 7.531 billion yuan.
Shares of Leshi had been suspended from trading since April last year until January 24, before tumbling 10 per cent in the first session after the lifting of the suspension and falling another 10 per cent to 9.05 yuan on Tuesday.
The huge projected loss was mainly due to declining revenues from user subscriptions, sold terminals, as well as sold advertisements for the period, Leshi said in a filing to the Shenzhen Stock Exchange late on Tuesday. Meanwhile, the company’s increasing daily operational and financing costs also had deepened the financial woes, it said.
A loss would be the first full year loss for the firm since its listing in 2010.
Jia, once dubbed ‘China’s Steve Jobs’, was frequently held up as a symbol of China’s technological advances, but since the company’s financial woes, has found himself under fire from regulators, who have ordered him to return to China from the US to deal with the company’s problems.
Jia has already resigned as Leshi’s chairman, but still has a controlling 26 per cent stake, although he has pledged most of his holdings to financial institutions as collateral for any future funding.
Analysts have previously said the company had almost no cash flow and unless it could solve the debt problem, there was almost no chance for the stock to turn around.