As LeTV finds itself in a challenging period marked by losses, Sun Lebin's new LeTV is accelerating efforts to devise a strategic plan aimed at achieving profitability. The stabilization of its primary business, particularly the TV screen segment, is a key priority. Recently, LeTV released its semi-annual report, revealing a loss of 637 million yuan in the first half of the year, representing a 323.91% year-over-year decline. LeTV attributed this loss to the financial troubles of related parties within the LeTV system, which has negatively impacted the company's brand and significantly reduced its main revenue streams.
Despite these challenges, insiders from LeTV spoke to the "Securities Daily," stating that following Sun Hongbin's involvement, the listed entity (New LeTV) has undergone a new round of integration. Post-integration, New LeTV is focusing exclusively on the TV screen business. Once new partners are secured, the next goal will be to ensure profitability across LeTV and its associated entities.
In another development, the "Securities Daily" learned that to maintain the stability of its core business, LeTV has resumed some production activities. Following its separation from Hon Hai (Foxconn), LeTV is currently in talks with potential new manufacturing partners. The reporter discovered that after Foxconn's exit, LeTV retained four foundries—TPV, Yichang, TCL, and Zhongqiang. Upon completing current negotiations, LeTV may introduce two to three additional foundries, potentially increasing its total number of foundries to seven.
Contrary to rumors suggesting a complete halt in production, a spokesperson for LeTV told the "Securities Daily" that production had merely been reduced rather than entirely stopped. The spokesperson confirmed that several models, including the 4X55M Eco Edition, have resumed production. The production is handled by Levision New (Tianjin) Co., Ltd., based in Kunshan, Suzhou, with the latest production date recorded as August 21, 2017. Therefore, LeTV’s models have already entered a new production phase.
For LeTV, a source stated that the current batch of models resumed production in August and is being manufactured by Yichang. Orders are placed with foundries, which then produce the TVs, storing them in warehouses before distribution worldwide. Once inventories of certain models reach a safe level, new product lines for those models will reopen. This cyclical process refutes claims of production halts.
It is essential to differentiate between the termination of cooperation and the termination of contracts. Misinterpretations of this distinction have led some media outlets to misrepresent the situation. LeTV continues to cooperate with foundries despite Foxconn’s departure, and negotiations for new partnerships are ongoing.
Regarding the search for new foundries, LeTV is actively engaging in discussions with potential manufacturers. LeTV, part of the LeTV listing system under Sun Hongbin's control, considers this core business integral to New LeTV's future. Sources suggest that Sun Hongbin's influence has bolstered confidence among potential new foundries.
Following the LeTV financial crisis, suppliers like Foxconn and Compal Computer parted ways with LeTV. LeTV Zhixin, a subsidiary of LeTV, primarily manages the company's smart TV business. Foxconn's abrupt withdrawal marked the end of a four-year partnership.
LeTV and Foxconn initially collaborated in 2013, with Foxconn becoming the exclusive manufacturer for LeTV’s super TVs and internet set-top boxes. An agreement prevented Terry Gou from producing smart TVs for other Chinese internet firms. Later that year, LeTV disclosed that Shenzhen Guanding Construction Engineering Co., Ltd., an affiliate of Foxconn, would invest in LeTV, acquiring a 20% stake post-investment. This alliance symbolized a strong bond between Terry Gou and Jia Yueting. However, their friendship began to wane over the years.
By early 2016, Shenzhen Guanding was removed from LeTV’s shareholder list, marking the end of their relationship. Foxconn’s decision to cease OEM production allowed for full inventory clearance. Despite this, LeTV set a new sales target for 2017: aiming for 7 million units, with aspirations reaching 8 million. Whether this goal will be met remains uncertain.
Sun Hongbin’s arrival brought significant changes, with Liang Jun replacing Jia Yueting as CEO. Under Liang’s leadership, LeTV’s organizational structure has been restructured, and integration of the TV operations and LeTV Network teams is underway. The company’s future business will focus on the TV screen market. Liang emphasized the need to quickly identify new profit sources for LeTV. A stable partner is crucial for New LeTV’s profitability in the TV industry.
Insiders noted that LeTV has identified new foundries and negotiations are ongoing. Cooperation will depend on mutual interest agreements. Each foundry differs in TV specifications, and LeTV plans to work with multiple partners to meet its substantial demand.
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