The LeTV controversy continues. Jia Yueting's wife Gan Wei raised funds domestically to solve the debt crisis. One of the major things Gan Wei did was to sell Coolpad's shares.
On the evening of January 4, Coolpad issued an announcement stating that the company’s largest shareholder, Leview Mobile HK Limited owned by Jia Yueting, sold 897 million Coolpad shares (accounting for 17.83%) at a price of HK$0.9 per share. The total transaction price was approximately HK$808 million (RMB 670 million), and the buyer was Viri Venture Capital. After the sale, Viri Ventures replaced Jia Yueting and became Coolpad's largest shareholder.
From the love triangle between 360, Coolpad and LeTV, to LeTV’s high-profile entry into Coolpad, and then to LeTV’s embarrassing exit, Jia Yueting’s ecology failed to reverse, and Coolpad also moved into the abyss step by step.
Why is this? It all started in 2014.
The reason that was once promising
In 2013-14, smartphones transitioned from operator channels to social channels. Xiaomi seized the opportunity and rose rapidly, making the concept of Internet mobile phones popular. The four traditional giants, "China Cool Alliance", were impacted and successively created Internet mobile phones to actively respond to the challenge.
When business changes, Coolpad is not slow to respond. In January 2014, Coolpad officially announced the launch of the independent e-commerce brand "Dashen", directly targeting Xiaomi, and simultaneously released two new 8-core e-commerce products: the large-screen mobile phone "Dashen" and the thousand-yuan mobile phone "Dashen F1", which are launched with Xiaomi. Head-to-head competition.
Looking back at the report card of smartphones in 2014, you will be surprised to find that the sales volume of each company was still at a stalemate at that time, and each company had the possibility of success. It was completely unexpected that the pattern would be so turned upside down three or four years later. : Xiaomi squeezed out Samsung and became the number one in China; Lenovo ranked third and has not fallen behind; Coolpad has annual sales of more than 40 million, ranking sixth, close to Huawei; OPPO and vivo ranked seventh and eighth, these two Players are quietly working hard offline, waiting for the explosion of offline channels; ZTE ranks ninth, showing obvious signs of falling behind.
At the end of 2014, Coolpad, which was showing signs of decline in the second half of the year, and 360, which did not want to miss out on the smartphone trend, hit it off and established a joint venture, Qiku. 360 hopes to use Coolpad to make up for its shortcomings in hardware production, supply chain, distribution channels, etc. Coolpad hopes to use 360's advantages in the Internet to reach a higher level. Everything looked beautiful, and Zhou Hongji also jokingly called this alliance "Songshan Lake Love".
However, this promising relationship did not develop smoothly. In June 2015, LeTV spent 2.18 billion yuan to invest in Coolpad, accounting for 18% of the shares, becoming Coolpad's second largest shareholder and triggering the "love triangle between Coolpad, LeTV, and 360" controversy.
That night, Zhou Hongqi responded strongly in the circle of friends: Whoever stabbed me in the back and tried to screw me, my principle is to go back. Love in Songshan Lake has become no love in Dongguan. Lao Zhou's anger is also reasonable. Qiku bears Lao Zhou's hopes. Lao Zhou is a strong person. How can he accept his competitor LeTV as his indirect shareholder?
The dispute ended with a compromise: LeTV was able to enter Coolpad, Coolpad's shareholding in Qiku dropped from 50.5% to 25%, and 360's shareholding will increase to 75%.
In June 2016, LeTV purchased 11% of Coolpad’s shares for HK$1.047 billion. In addition, LeTV invested 2.18 billion yuan in Coolpad in June 2015, accounting for 18% of the shares, and LeTV holds a total of 28.90% of Coolpad's shares. At this point, LeTV became Coolpad’s largest shareholder.
After LeTV became the largest shareholder of Coolpad, the two parties jointly drew a clear blueprint: LeTV relied on Coolpad to improve its layout on the smartphone side, and Coolpad provided traffic entrances for LeTV's "ecological response"; Coolpad leverages LeTV’s ecological capabilities to improve user experience and enhance the competitiveness of smartphones.
This all looks wonderful!
Chain reactions under the funding crisis
Why Coolpad chose LeTV instead of 360, I personally think there are three reasons.
First, the two have complementary advantages. The explanation of Coolpad's senior management is that the two companies are relatively complementary, and the LeTV model allows Coolpad to see the possibility of regaining its glory.
Based on the general environment at that time, the above analysis does not make sense.
LeTV’s stock price was still at a high level at the time, and the complementary advantages between the two were clearly visible: LeTV’s strong traffic, content platform, marketing and brand capabilities combined with Coolpad’s strong R&D, hardware, patents, supply chain, channels, etc. By integrating, introducing and integrating the LeTV ecological model, Coolpad can create new experiences and higher values ??for users; enjoying Coolpad's e-commerce, offline, operator and other channel resources as well as hardware R&D capabilities, LeTV can both improve technology and The sales reserve force will also have advantages in the distribution of ecological content and user penetration.
But the problem is that soon after the cooperation, the stock price of LeTV, which supports LeTV’s capital flow, began to plummet.
Second, LeTV is generous. LeTV made two purchases totaling more than 3 billion yuan. This can provide material support for the retirement of Coolpad founder Guo Deying. In contrast, 360 only invested US$400 million to establish Qiku.
Third, by choosing LeTV, Coolpad has more initiative. When a person is extremely eager for something, possession becomes instinctive, let alone a strong person like Lao Zhou. Since he wanted to make mobile phones, he tried to gradually strengthen his control over the core supply chain and patent capabilities through Qiku, a joint venture established by 360 and Coolpad, with the latter two being in the hands of Coolpad. Lao Zhou selling the master at a low price may be a concrete portrayal of this ambition. An insider revealed, “Since the alliance between 360 and Coolpad, 360 has been trying hard to seek Qiku’s dominance, but people from Coolpad have been unable to get in the way.”
In contrast, Jia Yueting’s attention In terms of efforts to build a mutually neutral ecosystem, the competition for the dominance of Coolpad smartphones is very weak.
However, it is a pity that Coolpad did not get help from LeTV. Instead, it was dehydrated and even faced the possibility of being sold by LeTV for its own blood transfusion.
Less than half a year after LeTV became the largest shareholder of Coolpad, LeTV suffered a funding crisis. On November 6, 2016, LeTV Holdings CEO Jia Yueting issued a letter to all employees, acknowledging LeTV’s financial constraints, reflecting on the company’s too fast pace, and saying that supply chain pressure has increased sharply in recent months. Jia Yueting’s letter from all employees confirmed the rumors that LeTV owed suppliers more than 10 billion yuan.
LeTV’s financial crisis became the trigger for Coolpad’s accelerated decline. Liu Jiangfeng said helplessly in an interview, "This year (2017) funds are very difficult. Because of the relationship with LeTV, the bank's funds this year are only repayments." In the past 17 years, Coolpad Group has been successively acquired by Ping An Bank, Bank of Ningbo and Shanghai Pudong Development Bank. The lawsuit was filed and the three banks recovered a total of 240 million yuan. Coolpad can’t even gather the materials and supply chain funds for the expected shipment of 500,000 Cool M7 units.
Smartphones are a capital-intensive industry. Banks’ behavior of “borrowing umbrellas in sunny days and closing them in rainy days” is a disaster for any mobile phone manufacturer, let alone Coolpad.
In addition to not having enough materials and winning funds, Coolpad is also unable to carry out normal sales. Last year, Coolpad's national promoters were reduced from 3,000-4,000 to 700-800, and more than 300 fresh graduates were terminated. The overwhelming advertising and marketing endorsed by popular celebrities are even more luxurious for Coolpad.
There is neither sufficient funds for production and research and development, nor enough funds for sales. What makes Coolpad even worse is that consumers and channels have also lost confidence in Coolpad because they are worried that Coolpad will go bankrupt. Consumers and channels No one dares to sell it. Consumers are afraid of buying the last Coolpad mobile phone, and channels are afraid that it will not be sold and will become inventory.
As the saying goes, a penny can stump a hero, but the chain reaction caused by the funding crisis dragged Coolpad into the bottom. In 2015, Coolpad mobile phone shipments were 38 million units. In 2016, sales shrank to 15 million units. The situation in 2017 is even less optimistic. Coolpad's stock price began to fall in September 2016. Today, the total market value is approximately 3.6 billion, and nearly half of the market value has evaporated.
The only comfort is that Coolpad still has ways to save itself. Coolpad holds valuable land resources, which are more than enough to cover its debts, so much so that former Coolpad CEO Liu Jiangfeng described Coolpad as begging for food with a golden rice bowl.
Facing the future
Now that LeTV is no longer the largest shareholder of Coolpad, Jia Yueting is busy with Faraday’s financing while dealing with the debt crisis; Zhou Hongyi’s business focus is also It moved from smartphones to Huajiao Live; Jiang Chao, an old cool guy, became the CEO of Coolpad and began to revive Coolpad.
Looking back on this past event, LeTV’s funding crisis broke out six months after investing in Coolpad. Was it too radical? Will Lao Zhou reflect on his own dominance in Qiku? Does Coolpad regret selling out to LeTV instead of trying to save itself through its own efforts? All the answers probably have to be found in the memoirs of the parties involved.
Jiang Chao’s measures to revive Coolpad can be divided into two aspects. On the one hand, he introduced real estate developers to jointly develop part of the land resources in his hands to solve the financial crisis; on the other hand, he pinned his hopes on overseas markets. Especially the US market. At present, Coolpad has successfully conquered three of the four major US operators (AT&T, T-Mobile and Sprint) in the US market. In addition, the model Catalyst, which cooperates with T-Mobile, has successfully sold 2 million units, ending successfully. . Defiant, the successor product in partnership with T-Mobile, has weekly sales exceeding 10,000 units, and overall sales are expected to exceed 3 million units.
Lei Jun said that no mobile phone company in the world can successfully reverse the decline in sales, except Xiaomi! In fact, for a 20-year veteran of the mobile phone industry, Coolpad's experience in transforming from pagers to smart terminals, and from Windows CE to Android is more spectacular than Xiaomi's rebound. I hope Coolpad can tide over the difficulties and become a phoenix?!