HONG KONG, Nov 21 (Reuters) - Shares of Chinese smartphone maker Coolpad Group Ltd slid to a four-year low on Monday after the company flagged a drop in full-year profit amid stiff competition, the latest part of the LeEco empire to come under pressure.
Coolpad’s warning came just weeks after Chinese conglomerate LeEco, which has invested in high-tech products from electric cars to smartphones, said it was grappling with a shortage of cash and suffering from expanding too fast.
LeEco’s billionaire founder and chief executive, Jia Yueting, said in a letter sent to Reuters that the firm was facing “big company disease” after having expanded at an “unprecedented rate”.
Shares of Coolpad, which has a market value of HK$5 billion ($645 million), plunged as much as 12 percent to HK$0.90, their lowest since October 2012, lagging a flat overall market.
The smartphone maker has faced difficulties competing in an increasingly saturated smartphone market in China with the likes of Samsung Electronics, Apple Inc, Lenovo , Xiaomi, Oppo, Vivo and Huawei Technologies.
In a statement to the Hong Kong stock exchange late on Friday, Coolpad said it expected a loss of HK$3 billion for the full year 2016, a sharp drop from the HK$2.3 billion profit it posted in 2015.
The company said its performance was hit by a downturn and fierce competition in the domestic smartphone market, and it was focusing on clearing inventories.
The news comes amid concerns that the cash-strapped group could run into a crisis or abandon its electric car ambitions - a project which has already cost it 10 billion yuan ($1.5 billion) in development, according to Jia himself.
Leshi Holdings said earlier this month that it had secured commitments for $600 million to support its automotive unit and LeEco high-tech business. ($1 = 7.7564 Hong Kong dollars) (Reporting By Donny Kwok and Jess Yu; Editing by Subhranshu Sahu)