LeEco facing continued cash shortage amidst market expansion, business turbulence

Over-extending at a time of lowered sales and under-performing units is a bad combination.

LeEco's troubles in 2017 have been numerous and well-documented, but it seems the issues with cash flow have continued and expanded as of late. Speaking this week, LeEco chairman Jia Yueting said the company's cash issues are "far worse than expected" despite a massive $2.4 billion investment earlier this year.

Despite LeEco's U.S. launch reaching the point of taking on the "failure" tag, issues with the company run far deeper. Launching a suite of TVs and phones in the U.S. was an ambitious move for sure, but it was really just an example of LeEco perhaps extending itself too widely when it didn't have the cash flow to cover operations. LeEco decided to pay back a considerable amount of debt at a time in which its overall business was in a downturn — a confluence that really hurt the company.

Despite LeEco's U.S. launch reaching the point of failure, issues with the company run far deeper.

Jia said in a shareholder meeting that he had expected the large investment from earlier in the year to "solve all the problems" but that clearly wasn't the case as some of LeEco's non-public units continued to have tighter-than-expected finances. The plans is to consolidate and liquidate assets within those non-listed units to help out its overall cash position. Jia also said it's full steam ahead in getting its electric car unit into production after a big round of funding — something that seems increasingly speculative for a company facing financial issues.

Even though its deal to buy Vizio ended up falling through, the hope is for the profitable TV segment of LeEco to focus on the smart TV business and center it around larger panels. The smartphone business, as we all could've expected, isn't likely to be a large driver of revenue going forward when looking at these plans.