For most people, it was just an ordinary day, but for Apple and its investors, it was another cruel trading day.
Just like yesterday, the pre-market news was all bad for Apple. From yesterday's market close to today's pre-market, Apple did not make any announcements, nor did it give investors an explanation for the stock price collapse. The media seized on this point and made a big deal out of it, saying that Apple had completely given up today.
In fact, whether Apple responded or not, the result would be the same. If it did not respond, the media would say that it had given up. If it responded, the media would say that it was like a mantis trying to stop a chariot.
In the pre-market news, a TV financial program said that, according to the grapevine, Jobs had asked the board of directors to resign. Apple was now discussing the election of a new CEO, but no one seemed to be interested in the position.
Before the market opened, some financial experts predicted that Apple's stock price would fall by at least 5% today, or even more.
If there was any major negative news today, it was estimated that Apple's stock price would fall by more than 10%.
When the US stock market was about to open, Louis Martin, the senior VP of Sequoia Capital, got off the plane and hurried through customs. He took a special car sent by Sequoia's Hua Xia branch and went straight to Makino Technology to meet Li Mu.
Although Louis Martin had been flying for a long time, fortunately, he was on a private plane, so these more than ten hours of flight did not make him tired at all. Instead, it gave him an excellent experience of rest and relaxation. So at this moment, on the way to Muye Technology, he was full of energy.
Originally, Louis Martin was embarrassed to talk to Li Mu after landing at night, but Li Mu insisted that he go to Makino Technology as soon as possible. So, he could only rush to meet Li Mu at night.
Li Mu met Louis Martin, who came all the way from the US, in his office. During the last round of financing for Makino Technology, the two had crossed paths, but that was mainly for Makino Technology's financing business.
Louis Martin was not only the senior VP of Sequoia, but he also had extensive experience in the industry. In his early years, he had been working in the securities industry and the IPO field, so he had a very deep understanding of the US stock market. Under normal circumstances, Louis Martin would take the lead and be responsible for the companies that Sequoia invested in eventually going public in the US.
It could be said that Louis Martin was the one in the entire Sequoia system who understood the US stock market the best. With just a word from Li Mu, Sequoia sent such a trump card to Beijing. It could also be seen that Sequoia attached great importance to Makino Technology.
As soon as Louis Martin saw Li Mu, he immediately went up and shook hands with Li Mu. He said to Li Mu in fluent Chinese, "Hello, Li Zong, we meet again!"
Li Mu smiled and shook hands with him. He said, "Thank you for your hard work, Louis. You flew all the way here and didn't even have a moment to rest."
Louis Martin said with a smile, "Li Zong, this time I came on our chairman's private plane. To be honest, it's much more comfortable than a five-star hotel."
"That's good." Li Mu nodded and gestured to Li Ziwei. He said, "This is my personal assistant, Li Ziwei. You two can exchange contact information so that it's easier to communicate in the future."
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, and the two exchanged business cards.
Li Mu said to Louis Martin, "Louis, let's sit down and talk. What do you want to drink? I'll ask Ziwei to get someone to prepare it for you."
Louis Martin said to Li Ziwei, "Miss Li, please get someone to get me a cup of coffee."
"Okay." Li Ziwei nodded and asked Li Mu, "Li Zong, what about you?"
Li Mu said, "I'll get a bottle of Coke to get some sugar. I've been too tired these past few days."
After taking a seat in the reception area, Li Mu went straight to the point and said to Louis Martin, "Louis, I came all the way here to ask you a question. How can I buy a majority of Apple's shares and then get Apple off the NASDAQ and privatize it?"
Louis Martin guessed that this was the reason why Li Mu came to him. He hesitated for a moment and said, "Li Zong, I'd like to ask you a question. Do you want to buy Apple?"
Li Mu nodded. "That's right. I want every share of Apple, every product line, every patent, and even their teams."
Louis Martin said, "Li Zong, based on the current plummeting trend of Apple, it's not impossible for the company's market value to fall below three billion USD. At that time, investors, individual shareholders, and controlling capital will all go crazy. Even if these investors only buy a hundred shares of Apple, they're doing it to make money. But the plummeting share price and market value will make them lose everything, and it'll be very difficult to stop the losses. In this case, all you need to do is send a written offer to Apple and set a price for Apple. Then, let Apple's management and board of directors consider it."
"That simple?"
Louis Martin smiled and said, "This is the first step. If you want to buy the majority of Apple's shares, you first have to make sure that the majority of Apple's voting rights are inclined to agree to your acquisition. If these people with voting rights agree, then the shareholders behind them won't be able to do anything even if they don't agree."
Li Mu asked again, "What about the shares in the market?"
Louis Martin said, "Don't worry about that. In the path of privatization of large enterprises, small shareholders and individual investors have no say. As long as the offer passes the vote of Apple's management, privatization will be very easy."
Speaking of this, Louis Martin added, "However, since it's privatization, most of the companies will have to pay a certain premium. Some will pay 40-50%, some even higher. With Apple's current situation, we can't give them a specific premium right away. We have to conduct in-depth investigation and evaluation. On one hand, we have to understand their operating conditions and the possibility of recovery in the future. On the other hand, we have to understand the current psychological state of their shareholders.
If most of the shareholders are eager to jump out of this fire pit, then privatization will be much easier. As long as we give them a certain premium, they will get rid of Apple's shares like a hot potato. But if they are still optimistic about the future of Apple when Apple's share price has plummeted, then privatization will not be so easy. Maybe even if we give them a 100% premium, they may not succeed. "
Li Mu nodded slightly and said, "The US 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 a laptop. She took out the US stock trading software and placed the laptop in front of Li Mu.
Louis Martin couldn't see the computer screen, so he said, "I read some pre-market news on the way here. Overall, today's capital market is very pessimistic about the future of Apple. I think the share price will fall at least 8% today."
Li Mu looked at the data on the screen and said in surprise, "Looks like you're right. Apple's share price fell 7% since the opening, from $5.47 to $5.08. It will definitely fall below $5 today."
Louis Martin nodded and said, "Today's pre-market news for Apple is bad. A large number of returned iPods will force Apple to spit out the profits it has already eaten. A large number of users are protesting, asking for a refund or subsidy policy from Apple. At that time, just the returned iPods and overstocked iPods will cause Apple's entire supply chain to collapse. Coupled with the protesting users, it will be really hard for Apple to hold on this time."
Li Mu asked Louis Martin, "Do you know much about Apple? Do you know how many iPods they have in stock right now? "
Louis Martin said, "Normally, it takes at least 5 to 60 days for an electronic product with fierce competition. If a mobile phone brand has annual sales of 10 million units and monthly sales of 830,000 units, then they should have about 1.5 to 1.6 million units in stock under normal circumstances."
Speaking up to this point, Louis Martin added, "But Apple's iPod sales were very good before, so their inventory should be very short. I estimate that it will take at most thirty days. Using five million units a year as an example, the inventory should be about a month's worth of sales. That should be about 400,000 units. Including the recent user returns, I estimate that it will reach 500,000 units."
Li Mu nodded and said, "If Apple's inventory is 500,000 units, and the current sales are greatly discounted, Apple will definitely not continue to maintain the previous production. It is very likely that they will reduce most of their production, and then reduce the inventory through promotions and price cuts."
"Something like that." Louis Martin shrugged and said, "Currently, there is no other way but to reduce the price of the iPod 3. But if Apple reduces the price by a large margin, the iPod business line will not be able to make money. So once Apple is prepared to reduce the inventory by a large margin, it basically means that the iPod will soon be discontinued. Because they can't continue to let the OEMs continue to produce at a loss, and the OEMs also need enough orders to survive. If Apple reduces the production or stops production, the iPod production line may stop. At that time, the iPod will be completely dead."
Li Mu smiled and said, "If the 500,000 units in stock are reduced by a large margin, Apple may not be able to make a single cent of the profit. They might even have to pay the distributors and OEMs, right?"
"That's right." Louis Martin nodded and said, "But Apple has been very aggressive with the distributors and OEMs. The distributors pay first before picking up the goods, and the OEMs deliver the goods first before settling the payment. So if Apple acts shamelessly, they can first owe the distributors the outstanding payment, and then clear the inventory through their own Apple-Store. Then, they can continue to owe the OEMs. In this way, the inventory of hundreds of thousands of iPods can be exchanged for hundreds of millions of dollars for Apple's cash flow."
After a pause, Louis Martin added, "But this will also bring hundreds of millions of dollars of debt to Apple. If Apple has a way to break out of this situation, they can use this money to solve the emergency. If not, it doesn't make much sense for them to keep this money. It all depends on whether or not Apple has any secret weapons on hand."
Li Mu was a little shocked in his heart.
In comparison, he was a far cry from a professional like Louis Martin. He only thought about how Apple's stock price would plummet, its market value would plummet, and its profits would plummet. He did not expect that Apple could still use its inventory to pay for itself. Although it would be destroying the distributors and OEMs to pay for itself, it would still be able to get hundreds of millions of dollars in cash. This was just like the saying, a starving camel is still bigger than a horse …
Apple definitely still had a lot of cash on hand. After all, the impact was on the stock price and future profits. Li Mu could not reduce the cash on Apple's account. Adding the hundreds of millions of dollars in cash from the inventory, it was not a small amount. If Apple took this money and suddenly came up with something new, it might be able to break out of this predicament. If that was the case, then it would be too f * cked!
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