Chapter 2996 Four Basic Principles

$1.5 billion? This was a piece of news that also stunned Feng Yiping.

It wasn’t about the amount. Since they came to participate in the auction, they certainly had a maximum price. $1.5 billion was still a long way from their price.

But, why did they offer a high price of $1.5 billion so quickly?

The starting price they offered was $900 million, and the minimum increase in the first round of bids was $5 million. Intel increased the price by a full $600 million at the beginning.

He couldn’t help but shake his head. Judging from the intensity of the competition, it seemed that they might not be able to afford the highest price they had set.

“As soon as the first round ended, the alliance led by patent insurance company RPX announced its withdrawal,” Cummins continued.

Feng Yiping was not too surprised by this, because RPX was co-founded by venture capital companies such as KPCB and Charles River. The style of RPX was of course more like venture capital, that is, looking for opportunities to get high returns at the lowest cost.

Such hard-hitting bidding similar to auctions is not their style.

Moreover, in terms of strength, RPX is not on the same level as the other four groups, the Android and Microsoft Alliance, Apple, Intel, and the alliance formed by Ericsson, BlackBerry, Sony, and EMC.

Among them, the worst BlackBerry had a revenue of more than 10 billion US dollars last year, but RPX's revenue did not exceed 100 million.

However, it is said that several domestic companies, including the two major telecommunications equipment providers, Huawei and ZTE, are members of this alliance. It seems that their efforts have unfortunately hit a snag at the beginning.

But I believe they are not unprepared for such a result. They knew that there was little hope, otherwise, they would not have joined the RPX Alliance under anonymity. Otherwise, they could have joined forces or become a bidder alone.

Even if they were taken alone, the two of them are much stronger than RPX.

"They found us and hope to join forces with us,"

"Oh," Feng Yiping was not surprised. It is estimated that the other companies, the RPX Alliance that just withdrew, have also found them.

"Microsoft is not interested in joining forces with them," Cummins added.

Feng Yiping thought that Cummins himself might not be interested in this either. He explained this because he also knew that there were Chinese companies in this alliance.

"Just make your own decision," he said.

Cummins was still wondering if the boss had any other meaning in his words.

Feng Yiping said again, "It's still the principle I told you before. This time, we should try our best to respect Microsoft's opinions."

One of the reasons why he took the initiative to find Ballmer and hoped to join forces was that Microsoft and Nortel had a close relationship. Nortel had won the status of Microsoft Gold Certified Partner that year.

This is the highest rating Microsoft has for its partners.

The two companies had achieved remarkable results in their cooperation in the enterprise communications business a few years ago, and the two sides also cross-licensed many patents for this purpose.

In short, Microsoft is a very good old friend of Nortel.

Cummins was relieved now. The boss's words really had no other meaning. "I understand Feng, then, look at our next offer..."

Feng Yiping interrupted him, "You don't need to ask for my opinion, just negotiate it,"

He said he would not ask, and that means he would not ask.

As for why he didn't help domestic companies this time, the main reason was that after analyzing the financial situation of the two companies, he knew that they had not made sufficient liquidity preparations for this auction.

Huawei is better, with cash reserves of more than 5 billion US dollars, while ZTE only has more than 600 million US dollars...

If they bid high for these patents, it will inevitably have an adverse impact on their operations, and they currently lack the means to increase the value of the patents.

"Okay Feng, I'll come to the meeting right away,"

The first round of bidding has ended because of Intel's generosity, and the second round can only wait until tomorrow.

Lao Ma came over, "Is it over there?"

"It's over, Intel seems to be anxious!"

"Seeing you so relaxed, I know that this auction should be fine," Lao Ma said.

"Not necessarily," Feng Yiping shook his head, "I have a hunch that this auction might launch a satellite,"

Such a large group of local tycoons gathered together, and they were so fierce at the beginning, it would be strange if the price could be low.

"But we must resolutely participate," Mayer also came over.

That is, under the current situation, as the initiator and core of the Open Handset Alliance, Android must take a stand on this matter.

"Yiping," Lao Ma saw that the top person in charge of the US business had also come over, so he held a small meeting, "Do you want to formulate a basic law for us?"

Mayer looked at the executives who were still discussing fiercely and had such questions.

Of course, they all knew that this was actually Feng Yiping's preparation for his future retirement.

According to his retirement at the age of 35, there are only a few years left.

"I didn't think about formulating something as high-sounding as a basic law, I just hope to set a few basic principles," Feng Yiping also said while looking at the executives who were still discussing fiercely.

He is still working, so some major directions, even Lao Ma and his team don't have to worry about, but after he retires, Lao Ma and his team must consider more issues, so it is very necessary to establish some rules.

…………

After a brief lunch, the meeting continued at 2 pm. Feng Yiping looked at the executives who seemed to be reluctant to leave and treated this meeting as a rare party and said, "I believe that everyone has summarized a lot of experience, and I guess everyone still has a lot of experience and feelings."

Indeed, using the mentality of a winner to analyze why a high-tech company that was once as powerful as Microsoft went bankrupt is something everyone likes to do.

"But due to time reasons, the collective discussion has come to an end. Also due to time reasons," he said with a smile, "after all, we still have to leave everyone free time in the afternoon and evening."

The atmosphere suddenly became relaxed.

Such extra holidays always make people happy - even if they are given a holiday, some people can't rest.

"Colleagues who hope to share their views with everyone are advised to express their views in our management system."

The current discussion is certainly not sufficient, but some key issues, even if they are discussed very fully, must be difficult to get the results that Feng Yiping wants.

To a certain extent, the interests of executives and the interests of shareholders represented by them are contradictory.

He only hopes that everyone can fully realize that an executive who only cares about his own interests is harmful to the company and his own interests.

The governance system related to executives will eventually benefit capital - that is, he still has the final say.

"Here, I would like to tell you my four views. First of all, that is, users, users, users!"

"The most important and core task of any of our companies is to meet user needs and improve user experience,"

"At any time, we can't deviate from our users,"

"Nortel's failure strongly illustrates this point. We see that whether they are developing 40G transmission per second or 80G transmission optical fiber, it is not mainly because of over-reliance on technology, but because it is an extreme decision that deviates from user needs,"

Lao Ma is seriously pondering the meaning of Feng Yiping's words. This is very different from his opinion, but he also feels that Feng Yiping's summary is more reasonable.

Whether it is 40G or 80G products, there is nothing wrong. The mistake is that it deviates from user needs.

When the company is developing smoothly and has sufficient funds, developing these technologies as reserves is a good decision. However, when the company is in crisis, spending huge amounts of money to develop these new technologies that users need and hoping to gain support from users to reverse the decline is a completely foolish decision from an outsider's perspective.

"Second, we must strictly control our debt ratio,"

Lao Ma knew he would talk about this.

"Before 2000, Nortel's annual revenue was as high as 30 billion US dollars. Even without considering inflation, this is a very high amount. Why did they never recover after adding 4 billion US dollars of unsaleable products?"

"The high debt ratio and the tight capital chain are the main factors leading to this result,"

"I agree with Buffett's point of view. If it is not because of illness, it is best not to borrow money. I personally want to do so. Even if debt-raising can bring us more income, I still prefer to rely on my own funds for development, even if the funds are idle,"

"For various reasons, the company suffered huge losses. We all have a certain probability of encountering such things. At that time, the level of debt ratio will determine whether we will be like Nortel, a century-old foundation, destroyed in an instant, or temporarily carry on with the burden and wait for the opportunity next year."

What he said was not surprising to everyone present, because he has always tried to do so. He would not borrow money if he could.

"Of course, considering that many of our companies will be listed in the future, investors will definitely not agree if they don't have debt."

If a listed company's debt-to-asset ratio is close to zero, then investors will definitely be very annoyed. When the capital profit rate is higher than the debt cost, such as interest, investors will hope that the debt ratio is as high as possible.

Because that means the company can create more profits and they will get higher returns.

"So, we allow debt, but for safety reasons, we should draw an insurmountable red line," he paused and emphasized, "I think our debt-to-asset ratio should not be higher than 30%,"

Lao Ma looked at everyone and immediately started talking again, thinking, you should just accept it, I have discussed it with him so many times, and he didn't give in on this point.

He looked at Mayer and believed that even Mayer would find it difficult to change this.

Lao Ma, who has failed many times on the road to entrepreneurship, also agreed with this. There is nothing wrong with being more stable.