Chinese smartphone maker Coolpad has announced a slump in sales, causing its shares to fall by nearly 10 percent. The company blames the slump on tough economic conditions and "fierce competition in the domestic smartphone market." This news is a fresh blow to its major shareholder LeEco, which recently increased its stake in the business.
Earlier this month, one of LeEco's co-founders admitted that the company is facing financial problems following its push into the US market.
Coolpad's stock plummeted to a four-year low after it declared that sales had fallen by 43 percent over the first 10 months of 2016. The company now anticipates to post a £3bn Hong Kong dollar ($386.8m; £313.2m) loss for this financial year.
LeEco became a major shareholder in Coolpad in June, when it raised its stake in the company to 28.9 percent. The two firms consequently teamed up to release the metal-cased Cool1 Dual smartphone in August but the device struggled against rival handsets from other Chinese tech firms comprising Oppo, Huawei, and Vivo.
"Chinese manufacturers used to be able to rely on their home market to give them unprecedented scale," said Ben Wood from the tech consultancy CCS Insight. "However, this year the Chinese market has plateaued and we are starting to see some of the casualties as a result."
This recent development casts a cloud over LeEco after a period in which it chased rapid growth. In June, the privately-owned company purchased 49 acres (19.8 hectares) of land from Yahoo in Santa Clara, California in a reported $250 million deal. In July, LeEco announced that it was procuring the US TV-maker Vizio for $2bn.
Last month, the Beijing-based company hosted a high-profile launch event in San Francisco, where it declared that it would start selling an extensive range of products in the US including a range of 4K TVs, a virtual reality headset, two smartphones, an Android-enabled smart bicycle, and a set-top box with its own streaming TV platform.
[Photo by Michael Rehfeldt/CC BY 2.0]