After a while, Kameda Masao returned with a smile on his face. < Business Weekly > will be satisfied if Feng Yu accepts the interview. Of course, it will be better if Feng Yu accepts the interview.
Although Feng Yu did not accept the interview, Masao Kameda wants to sell an exclusive piece of breaking news to < Business Weekly >. This news reminded < Business Weekly > of Enron, which had just gone bankrupt.
< Business Weekly >'s shareholders are all wealthy people, and they know how much profits this piece of news can bring in.
So, they immediately arranged to fly to San Francisco tomorrow to interview Masao Kameda. If Masao Kameda had not said he has something to do today, they would have flown to San Francisco today.
After knowing Nvidia's issue is settled, Huang Jiansen did not stay for long and went back to work. Feng Yu's company is on the rise, and he cannot afford to rest. Feng Yu can build an advantage in the early stages of the company's development, and it will be easier in the future. The company is preparing to introduce accelerator processors.
Only Feng Yu, Masao Kameda, and Ralph are left in the office. Ralph brought three cups of tea over. After working with Feng Yu for a long time, he also felt that this bitter green tea was not bad.
Masao Kameda is a Japanese and loves to drink tea.
Feng Yu took a sip of the tea and nodded with satisfaction. This tea … … quenched his thirst!
Masao Kameda is getting anxious, but he can only accompany Feng Yu to drink tea.
Feng Yu put down his teacup and asked: "Kameda, do you know WorldCom?"
"WorldCom? Yes. It is the second telecommunication company in the US, just behind AT&T. Last year, WorldCom's share prices were over 180 billion USD. But after the dotcom bubble, it is only around 70 billion USD. Boss, the company that you are talking about is WorldCom, right? "
Masao Kameda felt something is wrong. WorldCom is a bigger company than Enron and is the world's number one internet service provider. If this scandal is exposed, their share prices will plummet like Enron. If no one bought it, then bankruptcy was the only way out.
"That's right. It is WorldCom. WorldCom's development is very interesting. If you look at WorldCom's financial reports, you will know that WorldCom is a company that grew rapidly during the internet bubble. How did the company develop? It was through mergers and acquisitions. The funds for mergers and acquisitions were not earned by them. They were raised by issuing shares. That means WorldCom is using investors' money to expand … "
Every company acquired by WorldCom did not pay a lot of cash. They were all controlled through equity swaps. They either exchanged their own shares or issued new shares to obtain enough controlling shares. Even the cash they paid was mostly raised through the issuance of new shares.
The benefit of this is that the managers are under less pressure, and they can use low costs to expand blindly. This kind of behavior, in essence, was a kind of money-making behavior, and it was difficult to bring benefits to the development of the enterprise. But if the scale of the acquisition is large enough to form a monopoly, they will be able to make profits.
Under normal circumstances, issuing additional shares is equivalent to adding water to wine. Ordinary investors will sell their shares for cash to avoid risks. But WorldCom's performance in the stock market had always been outstanding. With a large number of bankers supporting them, the investors did not dump WorldCom's shares. Instead, they continued to buy WorldCom's shares to support the market.
In the end, WorldCom grew from a 1 billion USD company to over 180 billion USD in a few years. Feng Yu remembers WorldCom's share prices were close to 200 billion USD in his previous life. But in this life, Feng Yu had dumped Microsoft shares earlier, and Nasdaq did not reach its peak. This resulted in WorldCom's market value not as high as in Feng Yu's previous life.
But the good thing is WorldCom's share prices did not fall as fast as in Feng Yu's previous life.
Although this time's dotcom bubble is more severe, WorldCom's CEO's words gave the investors confidence.
Our goal is not to gain market share or globalization. Our goal is to become the number one stock on Wall Street!
Because of this sentence, many investors came to prop up WorldCom's share prices.
But the turning point happened at the end of last year.
At the end of last year, WorldCom wants to acquire Sprint Telecommunications. Sprint Telecommunications is the third largest telecommunications company in the US, and the acquisition value is almost 130 billion USD!
This is the highest acquisition value in history. If the acquisition is successful, WorldCom will overtake AT&T and become the world's largest telecommunications company.
Unfortunately, the merger was jointly blocked by the European and US antitrust agencies. They believed that it would create a de facto monopoly. They will force the breakup of any company suspected of monopolizing the market, let alone this company.
After this acquisition failed, WorldCom suffered a huge blow. As mentioned earlier, WorldCom maintains its share price through mergers and acquisitions. If they succeed, they will become the number one in the industry, and they will get high profits.
But when the merger failed, the drawbacks of the previous mergers and acquisitions were revealed. If they do not acquire, they will not be able to issue new shares. If they do not issue new shares, WorldCom will not be able to survive.
When WorldCom was acquired in the past, it was already in high debt. More than 50 banks had lent WorldCom more than 100 million USD. WorldCom is still contacting these banks to get more loans. WorldCom had discussed with some banks and decided to look for another 25 banks to get more than 2.5 billion USD.
Without these loans, they will not be able to continue their operations. Currently, the company's debt ratio is very high. But those banks had no choice but to lend to them. If not, they will not be able to repay their previous loans.
To maintain their share prices and attract investors, WorldCom had to use accounting "tricks" to inflate their profits to create the illusion that the company is still making profits.
But WorldCom is different from Enron. WorldCom's fake accounts are higher than Enron's. One fake account is more than Enron's many years of profits. WorldCom's market value is much higher than Enron's, and their expenses are higher.
Feng Yu told Masao Kameda about this and took the report from Ralph.
"Here. This is the evidence."
Masao Kameda looked at Feng Yu in disbelief. "Boss, why did you think WorldCom might be faking their accounts?"
Feng Yu pointed to the company's financial audit. "Look carefully. WorldCom had hired Enron's audit company!"
… …
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