Chapter 1417 The Skinny Camel Is Bigger than the Horse
Sunset, sunrise, it's just an ordinary day for most people, but it's another brutal trading day for Apple and its investors.
Just like yesterday, the pre-market news was bad about Apple. From yesterday’s close to today’s pre-market, Apple did not issue any further announcements, nor did it give investors a word about the stock price crash. The media seized on this and made a big fuss, saying Apple has completely given up resistance today.
In fact, whether Apple responds or doesn't respond, the result is the same. If it doesn't respond, the media says they have given up resistance, but when it responds, the media will say they're just trolling and powerless.
In the pre-market news, a TV station's financial program said that according to the grapevine, Steve Jobs had proposed to the board of directors to leave, and Apple is now discussing the election of a new CEO, but no one seems to be interested in this position.
Before the market opened, some financial experts predicted that Apple's stock price would fall at least 5% today, or even higher.
If there is any major bad news today, it is estimated that Apple's stock price will fall by more than 10%.
When the U.S. stock market was about to open, Sequoia Capital's senior VP Louis Martin got off the plane, hurriedly passed the border, took a special car sent by Sequoia Huaxia Branch, and went straight to Muye Technology to meet Li Mu.
Although Louis Martin had flown all the way, luckily it was a private jet, so for him, the ten-hour flight was not tired at all, but gave him an excellent rest and relaxation experience, so at this moment he On the way to Muye Technology, the whole person is full of energy.
Originally, Louis Martin was embarrassed to talk to Li Mu after he landed at night, but Li Mu insisted on letting him meet with Muye Technology as soon as possible, so he had no choice but to rush to meet Li Mu in the dark.
In his office, Li Mu met Louis Martin, who came all the way from the United States. During the last round of financing of Muye Technology, the two had an intersection, but it was mainly for the financing business of Muye Technology.
Louis Martin is not only a senior VP of Sequoia, but also has rich experience in the industry. He has been working in the securities industry and IPO field in the early years, so he has a very in-depth understanding of the US stock market. Under normal circumstances, companies invested by Sequoia will eventually To operate the listing in the United States, it is all led by Louis Martin.
It can be said that Louis Martin is the one who understands the U.S. stock market best in the entire Sequoia system. With a word from Li Mu, Sequoia sent such a trump card to Yanjing thousands of miles away. The importance of Makino Technology.
As soon as Louis Martin saw Li Mu, he immediately stepped forward to shake hands with Li Mu, and said to Li Mu in fairly fluent Chinese, "Hello, Mr. Li, we meet again!"
Li Mu smiled slightly, shook hands with him, and said, "Thank you for your hard work, Louis, who flew so far and couldn't rest for a moment."
Louis Martin said with a smile: "Mr. Li, this time I came to take our chairman's private jet. To be honest, it is much more comfortable than a five-star hotel."
"That's good." Li Mu nodded, put his palm to Li Ziwei, and said, "This is my personal assistant, Li Ziwei. You can leave contact information for each other, which will facilitate future exchange of information."
Louis Martin hurriedly shook hands with Li Ziwei and said, "Hello, Miss Li, it's a pleasure to meet you."
Li Ziwei also hurriedly shook hands with him to say hello, and then the two exchanged business cards.
Li Mu said to Louis Martin, "Lewis, let's sit down and talk. What do you want to drink, let Ziwei order someone to prepare it for you."
Louis Martin said to Li Ziwei, "Miss Li, please have someone give me a cup of coffee."
"Okay." Li Ziwei nodded and asked Li Mu again, "Mr. Li, how about you?"
Li Mu said: "Let's have a bottle of Coke and add some sugar. I'm too tired these days."
After taking a seat in the reception area, Li Mu opened his mouth to Louis Martin and said, "Louis, I'm looking for you from so far away, in fact, I mainly want to ask a question.
How can I buy most of Apple's shares, and then delist Apple from the Nasdaq and go private? "
Louis Martin guessed that Li Mu was looking for him for this purpose. He hesitated for a while and said, "Mr. Li, I would like to take the liberty to ask, do you want to acquire Apple with full capital?"
Li Mu nodded: "Yes, I want every share of Apple, every product line and related patent ownership, and even their team."
Louis Martin said: "Mr. Li, judging from Apple's current plummeting trend, it is not impossible for the market value to fall below $3 billion. By that time, everyone from shareholders to individual shareholders and controlling capital will go crazy. I only bought 100 shares of Apple stock to make money, but the plummeting stock price and market value will make them lose all their losses, and it is very difficult to stop the loss. In this case, you only need to send Apple a message. A written offer document sets a market value for Apple, and then lets Apple's management and board consider it."
"It's that simple?"
Louis Martin smiled: "This is the first hurdle, because equity does not represent voting rights. If you want to acquire a majority of Apple's shares, you must first ensure that the majority of Apple's voting rights are inclined to agree to your acquisition. If the right person agrees, then even if the shareholders behind it disagree, it doesn’t make any sense.”
Li Mu asked again, "What about the tradable stocks in the market?"
Lewis Martin said: "Those don't have to worry. On the road to privatization of large companies, small shareholders and retail investors have no right to speak. As long as the offer is voted by Apple's management, privatization will be easy."
Having said that, Louis Martin added: "However, since it is a privatization, most of them must give a certain premium, some are 40-50%, and some are higher. With Apple's current situation, How much premium should be given to them, we can’t give them a number right away, we have to conduct in-depth investigation and evaluation, on the one hand to understand their operating conditions and the possibility of recovery in the future, and on the other hand to understand their shareholders’ current mental state;
If most shareholders are eager to jump out of this fire pit, it will be much easier to go private, as long as they are given a certain premium, they will dump their shares in Apple like a hot potato, but if they are in Apple In the case of the stock price plummeting, it is still optimistic about the future of Apple, then the privatization acquisition is relatively not so easy, and maybe even if a 100% premium is given, it may not be successful. "
Li Mu nodded lightly and said, "The U.S. stock market just opened, let's see what Apple's opening price is today."
As soon as Li Mu finished speaking, Li Ziwei walked over with her laptop in her arms. After pulling out the US stock trading software on it, she placed the computer in front of Li Mu.
Louis Martin couldn't see the computer screen and said, "I watched some pre-market news on the way here. In general, today's capital market is not optimistic about Apple's future. I think today's stock price will drop at least 8 percentage points. above."
Li Mu looked at the data on the screen and said in surprise: "It seems that your estimate is correct. Apple fell 7 points at the opening, from $5.47 to $5.08. Today's drop below 5 yuan should be a sure thing. matter."
Louis Martin nodded and said: "Apple's pre-market news today has new bad news, a large number of returned iPods will force Apple to spit out the profits that have been eaten, and there are still a large number of users. In protest, Apple is required to give a policy of return or subsidy. At that time, the return of iPods and the backlog of inventory will cause Apple's entire supply chain to collapse. Coupled with the users who continue to protest, Apple is really difficult this time. I can handle it."
Li Mu asked Louis Martin, "Do you know much about Apple? Do you know what their current stock of iPod3 is?"
Louis Martin said: "Normally, for electronic products with fierce competition, the inventory digestion cycle is at least 5-60 days. If a mobile phone brand sells 10 million units a year and sells 830,000 units a month, then their normal Inventory should be around 1.5-1.6 million units."
Speaking of this, Louis Martin added: "However, the sales of Apple's iPods were very good before, so their inventory digestion cycle should be very short. I estimate that it is at most 30 days. Take five million units a year as an example, Inventory should be sold for almost a month, about 400,000 units, plus recent returns from users, it is estimated to reach 500,000 units."
Li Mu nodded and said, "If Apple's iPod inventory is 500,000 units, and the current sales volume is greatly reduced, Apple will definitely not continue to maintain the previous production, it is very likely to reduce most of the production capacity, and then Deplete inventory through promotions and price cuts.”
"Almost." Luis Martin shrugged and said, "At present, there is no other way to go except to cut the price of the iPod 3 significantly, but if Apple cuts the price significantly, the iPod business line will have no money to make, so once Apple is ready to cut the price significantly Clearing the inventory basically indicates that the iPod will soon be discontinued, because it is impossible for them to continue to make the foundry manufacture at a loss, and the foundry must have enough orders to survive. If Apple reduces or stops production, the iPod production line will be lost. It might stop, and at that point, the iPod is dead."
Li Mu said with a smile: "If the 500,000-unit inventory is drastically reduced in price and liquidated, Apple may not be able to recover even a dime of profits, and even repay the resellers and OEMs, right?"
"That's right." Louis Martin nodded and said, "However, Apple was very strong with distributors and OEMs before. The dealers paid for the goods before picking up the goods, and the OEMs delivered the goods first and then settled the payment according to the cycle. Therefore, if Apple You can be a rogue, you can first default on the unsettled payment to the dealer, then clear the inventory through your own Apple-Store, withhold the cash returned from the clearing of the inventory, and continue to default on the contract. In this case, how can the inventory of hundreds of thousands of units be given Apple returned hundreds of millions of dollars in cash flow.”
After a pause, Louis Martin added: "However, this will also bring hundreds of millions of dollars in debt to Apple. If Apple has any way to break the situation, it can use the money first, but if not, withhold the money. It doesn't make much sense to them, it just depends on whether Apple has any secret weapons on hand."
Li Mu was a little shocked.
In contrast, I am too far away from professionals like Louis Martin. I only think about Apple's stock price plummeting, market value plummeting, profits plummeting, and all businesses being hit hard, but I didn't expect that Apple could also use inventory as a successor. Although he has torn down the walls of dealers and OEMs to make up for himself, he can still pull out over 100 million US dollars in cash. As the saying goes, a skinny camel is bigger than a horse...
Apple must still have abundant cash flow at the moment. After all, it is the stock price and the current and future profits that are affected. Li Mu cannot reduce the current cash on Apple's account, plus the over 100 million US dollars in cash that may be converted from inventory. The sum is indeed a lot of money. If Apple has so much money and suddenly comes up with something new in a hurry, maybe it can make it break out of adversity. If that’s the case, But it's so fucked up!
Immediately, Li Mu asked Louis Martin, "If I want to acquire Apple as soon as possible, what is the best way?"