Chapter 37: What a Nightmare!

After a brief holiday, William White headed to San Francisco. He paid close attention to this golden opportunity and definitely did not want anything to go wrong. Apple's computer sales were doing quite well. Although they hadn't reached 30,000 units, they were getting pretty close. Now Morgan Stanley had to face the facts: their valuation had a serious discrepancy. Morgan Stanley was basically the top investment bank of the time, and now they might actually be kicked to the curb. That was a tough pill to swallow for them. If Apple's IPO failed, they could laugh it off. But it was clear that many investors were interested in the company; nothing untoward was likely to happen. Not only was the great Steve Jobs unhappy, but so was Markkula. When questioned about the issuance costs, Morgan Stanley treated it like a joke. The monopoly on Wall Street was way stronger than in Hollywood; you couldn't just rent a stock exchange. They were now being questioned about their understanding of the industry. After all, even Steve Jobs pointed out, "Do you even know what a computer is?" In fact, not just Morgan Stanley, no company on Wall Street seemed to understand. The company used to have a normal situation, barely selling 10,000 units a month; how could it suddenly explode like this? Selling more than ten million dollars' worth of products each month was impressive, but it wasn't exactly a top-tier company. Their market share was still less than 40%. What was the situation now? Not only were Apple's sales climbing, but other companies seemed to be doing well too. Although their growth rates couldn't match Apple's, the increase in sales was undeniable. What puzzled them most was how their profit margins increased too. This simply didn't make sense. With such promotional efforts, didn't they have to cover costs? Darn it, that profit came from selling software. ... "Henry, what's the deal with that software company? How many units did they sell in July?" "Boss, we can't know the exact data. They are now a private enterprise, and all the shares are owned by one person, so they don't need to disclose that information." "Aren't they planning a first round next year? How much stock do they plan to sell?" "10%, and they won't sell more than that. Their CEO said if it weren't for considering the IPO, there wouldn't be any need for that part." "Tsk, tsk, darn rich folks! Why can't they be a little poorer?" "Boss, according to other companies' public info, they sold at least 60,000 software units in July. Even though that's only six million bucks, they had virtually no costs, so they made a killing." "Wow, really? I feel like I'm hearing a fairy tale. Are you sure this isn't a Ponzi scheme?" "Boss, it's probably not. There are rumors that the Big Blue is entering this industry too." "Fuck! They have such a company, and the boss is off making movies. He really is something else, isn't he?" Henry could only remain silent. The movie business was thriving, too. Roughly speaking, that guy could make a hundred million, far better than the profits from the software company. You're the boss; I just don't want to say the wrong thing. "Henry, what's that look on your face? Am I wrong?" "Boss, his movies are going to earn at least a hundred million. I honestly don't know how to explain this phenomenon." Pfft! The old man spat out his coffee. "Ahem, Henry, are you sure you're not talking about yen?" "No, I'm not. If there's nothing like Star Wars this year, their movie will be the box office champion." "My goodness, aren't they just running a farm? How did someone like that pop up?" ... Many investment banks discussed William White. They wanted to invest in White Software. It didn't matter how the valuation looked now; it would definitely be more next year. No one talked about shell companies anymore; their R&D capability was incredibly strong. They didn't just sell software; their business with adaptation cards also looked promising. Alright, those were all OEM products. Another thing about the company was that the owner didn't seem interested in manufacturing. They cared more about research and development. Currently, several types of adaptation cards on the market were from their company, and surprisingly, they were selling well. The gross profit margin was quite outrageous too, with the lowest being 100%. Although they didn't have to disclose data, the manufacturing was done by a public company, so investment banks could easily obtain this info. They outsourced production to OEMs and dumped sales to computer companies, making money while lying down. What irritated people the most was their attitude. They were quite dissatisfied with the current profit margins. If manufacturers didn't quickly lower prices, they planned to throw all their orders to a competitor. If they could develop adaptation cards, surely they could make computers, right? Clearly, they felt the profits weren't good enough, so they weren't interested in participating. "You all can do whatever you want. We won't work this hard for a measly profit." Investment banks really struggled with this valuation; the profit margin was just too high. While they were still investing, it certainly couldn't catch up with how fast he was making money. ... Not to mention the software company; even his movie company drew interest from investors. That was an even bigger challenge. He had a hundred million bucks; how did they expect to invest that? When faced with inquiries from investment banks, William White just shrugged, smiling wryly as he refused. He planned to burn through that money first; otherwise, there was no point in financing it if he couldn't even put it in a bank. Investment banks were also frustrated. Financing in Hollywood wasn't unusual; producers were busy doing just that. People were searching for funds everywhere while this guy had money with nowhere to put it. Hollywood big productions were strange. Even the giants couldn't play without external funding. Often, the giants contributed only around 30%. If they made money, everyone was happy; if they flopped, they all shared the misfortune. Distributors had their challenges too given the enjoyable tax rate. Cinemas were usually in shopping malls, and the rent was outrageous. If a movie didn't pull through, distributors could still end up losing money. The only advantage was that there were a lot of people. As long as your movie was decent, box office records would be broken eventually; they were just distractions. But that was all in the future. Right now, outside a few big cities, other places had only outdoor cinemas. The drive-in theaters were pretty ridiculous; they just set up a screen in an outdoor parking lot. It wasn't really about watching movies; it was more about providing convenience for young couples. I must say, life in America during this era was quite chaotic. How did they even come up with that? People hoped the movie's sound would be loud enough; otherwise, it would be real noisy. ... William White returned to Silicon Valley, where his micro-database was nearly complete. While there were still some flaws, he was quite pleased with it. He decided it was time to teach Larry Ellison a lesson. 'Don't come bother me again. Once my database is up and running, I can't wait to see your face.' "Speed up testing! Notify Apple and other interested companies to hurry up and come over. I'll give you guys at most another month." "Don't worry, boss. We'll definitely get it done." "Great! That's excellent. I'll add two extra months' salary next month. Keep up the hard work!" ***** https://www.patreon.com/Sayonara816.