It Turns Out Selling Ugly $50,000 Smartphones Is Actually A Bad Business Model

It Turns Out Selling Ugly $50,000 Smartphones Is Actually A Bad Business Model

Image: Vertu

Despite selling $US50,000 Android mobile phones to rich and famous stars like Quincy Jones and Seal, the England-based company Vertu appears to be struggling with paying its bills and employees. What a shocking development.

According to a juicy new report in the Telegraph, employees are worried about the future of the company after noticing that production had been running at reduced capacity. Employees are apparently worried about their unpaid wages, as well as pension contributions taken out of their paychecks without being added into the company’s retirement fund.

Sources inside the company also told the Telegraph that Vertu has unpaid debts with suppliers such as Qualcomm and Microsoft, and bills from waste management, pest control, and other property services.

Reports of unpaid bills are even more egregious in light of Vertu’s new $US40 million partnership with China’s TCL Communication to produce 30,000 phones. The partnership itself is ironic, given that TCL isn’t exactly a luxury parts maker — and Vertu’s products go for the price of an Audi A3 (or more). TCL is known for manufacturing smartphones for companies such as Alcatel and BlackBerry, including the new KEYone.

Things at Vertu seem to have gone down south since the takeover of Turkish exile and businessman Hakan Uzan, who promised to allow the company to “realise its full potential.” However, Uzan has seemingly managed to not only skimp his employees, but also apparently hasn’t paid the previous owner of the company, Gary Chen.

Chen told the Telegraph he hasn’t received any payment from Uzan since the deal was made in March, which leaves him with no other option but to sue Uzan for the “illegal act” of holding Vertu’s shares.

Uzan claims all aspects of the business transaction were concealed from him and only brought up to his attention once he took control. However, Uzan and his family are familiar with legal troubles — they have been hit with criminal charges before, and have also been involved in a fraud claim from Motorola and Nokia for loans that were used to fund their jet-set lifestyle instead of setting up their mobile operator.

We’ve reached out to Vertu for comment, and we’ll update if we hear back.

[The Telegraph]