Those Years When I Was Forced to Top the Forbes List

Chapter 413 I Don't Connect with the Internet
A room inside the ship's cabin.

"Lei is one of us, so just talk about ARM directly."

Seeing that Ma Yun seemed hesitant to speak, Chen Xuebing said...

He didn't have many friends on this trip, so he naturally wanted to show goodwill and hold on tightly to his two business partners.

This secret will no longer be a secret after a while; at most, it will be a "non-public investment."

Jack Ma smiled and nodded to Lei Jun, saying, "Sun and I discussed it, and his offer may exceed $4 billion. We'll split the portion released to us 50/50, how about that?"

Jack Ma didn't specify how much was released, but Lei Jun, standing beside him, was already in a state of turmoil.

Kingsoft's WPS is software aimed at consumer devices, so his basic understanding includes its architecture and ARM architecture.

The conspiracy to acquire ARM is a huge deal for the computer industry.

Chen Xuebing touched his chin.

40 million.

Masayoshi Son is really daring with his offer. ARM's market value is only around $26 billion recently, and this is a premium of over 50%. This price is outrageous.

However, Masayoshi Son and Steve Jobs had a good relationship, so if he has a deep understanding of Apple's prospects, it's possible that he could make a high-profile offer before Apple fully realizes the value of ARM.

I wonder if the high price was influenced by Qilin?

As agreed, of the 4 billion, Gu An and Alibaba will take 15%, which is 600 million US dollars, and will split the profits 50/50 with Alibaba, which is also 300 million.

He felt a slight inner conflict; if he waited for Masayoshi Son to act after the financial crisis, perhaps it wouldn't cost so much.

However, the timing is precious. Currently, ARM relies on licensing to important partners such as Texas Instruments to make money, but the revenue is not high. Texas Instruments' OMAP chip is designed for high-end feature phones and has not yet shown signs of decline. If feature phones are completely replaced, ARM will no longer rely on indirect licensing to make money. When the golden age arrives, it is hard to say whether it will be willing to sell.

Masayoshi Son was willing to pay a high price to play along with him, and he only spent $3 million himself. It would be unreasonable not to just give up.

"Okay, but after the contract is signed, I need one to two months to raise funds."

“Okay, I’ll tell Mr. Sun that our Alibaba board of directors may also need to hold a meeting and vote, so let’s set the payment date for August.”

"Okay."

Each of the three parties had its own agenda, but they were all equally decisive about this investment.

"By the way, your IPO date has been postponed. Where did the $300 million investment come from?" Chen Xuebing asked curiously.

Alibaba's IPO date has been postponed from the original June or July to November.

There's actually a very strange story behind this.

He remembered that Alibaba's IPO in his previous life actually took place around November. At that time, TV commercials advertised "Open Sesame," and when he and his mother saw the ads, they even said they would buy her a winter coat on Taobao.

He didn't pay much attention when he heard that Alibaba was going public in the middle of last year, but when he was preparing to buy some winter clothes for his mother at the winter solstice, he suddenly remembered this incident and felt extremely horrified.

Because this is a major event in the internet industry, it may involve many changes in timelines. He then carefully studied Alibaba's development over the past two years and found that Taobao's rise was actually much smoother than in his previous life. According to the data, since Alipay's big promotion of "You dare to pay, I dare to compensate" and several major updates to Taobao's webpage, the payment success rate, the number of customer complaints, and the dispute rate have all shown significant positive changes.

He was actually involved in all of these things.

The Star Diamond Crown rating and Alipay's commitment were both proposed by him in advance, which seems to have brought forward Alibaba's listing time by several months.

Later, Jack Ma and Joseph Tsai approached him to invest, offering him $10 billion to acquire 19.5% of Yahoo's Alibaba shares in order to eliminate potential future disputes over control.

This matter must be resolved before the IPO; otherwise, the shares will be subject to a lock-up period after the IPO, and the major shareholder's equity cannot be changed within one year.

Because of his funding cycle, the fund needed to exit during the stock market peak in October, so he told the two that acquisitions could be made in September or October.

So the two decided to postpone the IPO to November and sort things out before going public.

The timeline inexplicably returned, and it fit perfectly.

Time is a mysterious thing; it seems to have its own restorative power. This matter put Chen Xuebing at ease, because he was making greater and greater changes to the world. Whether some prophets could still be accurate was already an unknown.

However, apart from the stock market, he doesn't actually make money through any precise judgments. His investments are based on his understanding of the unknown future. Some things, even if they don't happen precisely, will happen sooner or later.

If it doesn't happen because of his influence, it might not be a bad opportunity for him.

Therefore, he always believed that he needed a large intelligence department. Only by understanding more of the situation could he make more accurate analyses based on the combination of prophecy and intelligence.

"We can manage to scrape together about 300 million US dollars. If we don't have enough, we'll borrow some from Mr. Sun and pay him back after the IPO. Anyway, Mr. Sun and I both agree to invest. If the other shareholders disagree, let's vote."

There were some things that Jack Ma didn't say too clearly in front of Lei Jun, and he gave Chen Xuebing a puzzling look.

Chen Xuebing also laughed.

Mr. Ma is becoming increasingly audacious, using this incident to continue testing Yahoo's bottom line.

The acquisition of ARM was spearheaded by Masayoshi Son, and since Alibaba wanted to participate in the investment, it was impossible for Son not to fully support it.

Yahoo's voting rights in Alibaba have been limited in recent years, but with Masayoshi Son and Jack Ma working together, major decisions are passed with ease.

Yahoo wouldn't understand ARM's future value like Jack Ma did. Ma was confident because he had intelligence from both himself and Masayoshi Son. So, with such a large, overpriced investment, the decision was made by him and Son, which must have made Yahoo a little panicked.

The partnership between Jack Ma and Masayoshi Son sends a clear signal to Yahoo: If you don't sell, you're in for a few years to come.

Yahoo is more likely to back down and sell its stake.

Everyone likes to kill two birds with one stone when doing things.

Many things are not planned in advance. Favorable opportunities often arise by chance. Being able to seize and make good use of them is an important quality of successful people.

"Mr. Chen, you really haven't noticed your own Weibo account?"

After finalizing the ARM deal, Jack Ma asked another question.

Chen Xuebing shook his head and smiled, neither agreeing nor disagreeing, then turned to Lei Jun and said:

"Mr. Lei, your IPO process has been fraught with setbacks and has been a long journey of eight years. You've tried everything from the A-share market and the ChiNext board to Nasdaq. Now that you're going to list in Hong Kong, are you confident?"

This is a sad topic.

Kingsoft first went public on the A-share market in 99, when its profits did not meet the target.

The second attempt to list on the ChiNext board coincided with a global tech stock downturn, leading to the suspension of the ChiNext board in China. The third attempt, listing on Nasdaq, was thwarted by the Southeast Rongtong accounting fraud scandal, a crisis of confidence in Chinese concept stocks, and the company's own limited overseas profits made it difficult to convince international investors.

It can also be considered a listed jinx lamp.

Lei Jun sighed and shook his head, talking about the last US stock listing he personally handled: "We thought Nasdaq would treat Chinese software companies the same way it favored Baidu, but we overlooked the valuation gap between utility software and search."

Chen Xuebing chuckled: "Your strategy was wrong before. Don't try to create a tragic narrative of domestic office software competing against Microsoft. The market doesn't believe in that. If you want to go public, just focus on running your game business well."

Lei Jun glanced sideways: "I heard that your Changzheng team called Qiu Bojun?"

Chen Xuebing nodded: "It was Lao Kan who made the call. He talked a lot with President Qiu. I wanted to help you. It just so happens that Changzheng is also transforming into a listed securities firm. If you trust me, I will be your joint advisor. If you adjust according to my ideas, the listing results may exceed your expectations."

"What are you planning to do?" Lei Jun sat up straight, adopting a serious attitude of seeking advice.

He was among the first angel investors in China, but the IPO process was truly exhausting.

Jack Ma is also quite interested. Chen Xuebing said he wants to join a securities firm. I wonder how capable this investment tycoon is.

Chen Xuebing had long planned to use two projects to gain experience. Kingsoft was riding high, and he had been calculating this for a long time. He immediately began to list the rectification measures:
"First of all, your business is too diversified, including office software, antivirus software, games, etc. Investors can't figure out what kind of company it is, so the valuation won't be high."

"To change the valuation, we need to make the core business more prominent, or, in today's financial circles, to be more attractive."

“Your main revenue comes from games right now, so Kingsoft is going to invest in game stocks. The game business, Seasun Entertainment, will be spun off as an independent subsidiary for financing.”

"Financing?" Lei Jun frowned. "Xishanju has the IP of 'JX Online' and the revenue is very good. Last year, we made more than 200 million yuan from 'JX Online 2' alone! At its peak, there were 400,000 people online at the same time. This is our biggest cash cow. Why do we need to raise funds?"

Chen Xuebing shook his head: "You only have 'JX Online 2' left, right? 'JX Online 3' is still under development. How can you have enough imagination? I think it would be better to let Tencent handle the distribution. Let them invest $50 million to acquire a 15% stake in Seasun Games, with no option to withdraw for five years. They get the distribution rights for both 'JX Online 2' and 'JX Online 3' for the next five years, and you get 20%-30% of the revenue. After five years, Seasun Games' equity can be exchanged for shares in the listed company, giving them an exit channel. Tencent has a large user base and is looking for good games everywhere. If you set the conditions, they will definitely agree."

Lei Jun was stunned: "We're just going to take $5000 million and sell the goose that lays the golden eggs? We'll have to give them back that $5000 million five years later. Isn't that like giving away the agency for free? He'll definitely agree, but we won't!"

Chen Xuebing sighed: "How can you calculate it like that? What about the game server and marketing costs? Tencent has hundreds of millions of users, isn't the potential much greater than your self-operated model? Which is more: one-time sales with 25% cost and 75% profit, or five times sales with 25% net profit? The market will recognize your game subsidiary's investment from Tencent and will be more accepting of you. The strategic synergy premium will increase by at least 20%. Besides, the Jianwang IP is in your hands. The more well-known the IP becomes through Tencent's operation, the higher the value of your hard assets will be, and the more prominent your game sector will be."

Lei Jun clicked his tongue, seemingly agreeing with the point, but was quite unwilling: "Our Kingsoft office software can compete with Microsoft for market share, and it has a high level of recognition from government users. Kingsoft Antivirus is also a leading software, right? Doesn't it have any premium? Why do we have to go all out on this gaming stock?"

"It seems you haven't traded stocks much. To trade leading stocks, you need a clear ability to identify them." Chen Xuebing pondered for a moment, then looked at Ma Yun. "Old Ma, Shi Yuzhu's Giant Interactive is going to be listed in the US soon. The initial distribution has been quite good. You know about this, right?"

Jack Ma, who was initially somewhat confused like Lei Jun, suddenly realized something upon hearing this: "Oh right! They are led by Merrill Lynch. I heard that UBS, Citigroup, and CITIC have all agreed to be their joint underwriters. They are quite popular."

"It's more than just good." Chen Xuebing shook his head and said confidently, "Previous Chinese companies listing on the US stock market all pursued size and quantity without choosing a good lead underwriter. This time, Giant's choice of Merrill Lynch is very suitable. Merrill Lynch is an absolute leader in the global TMT field. Even Goldman Sachs and Morgan Stanley cite their reports. With this advantage, plus Shi Yuzhu's marketing skills and the fact that 'Zhengtu' had revenue of over one billion in 06, it might just be able to give Giant the largest IPO among Chinese game companies, surpassing Shanda in one fell swoop."

Chen Xuebing glanced at Lei Jun as he spoke and said:
"Hong Kong is heavily influenced by the US stock market, you understand?"

Since everyone involved in the game industry in mainland China and they were launched at the same time, the similarity couldn't be clearer. If Kingsoft's "JX Online" had been operated by Tencent before its launch, its revenue would have been close to that of Giant Interactive's "Zhengtu," and its value would have been transferred from the United States to Hong Kong.

Lei Jun quickly realized this and clapped his hands excitedly: "Is that so!"

“Yes, but it’s not over yet.” Chen Xuebing continued, “Xishanju only distributed PC online games to Tencent. After receiving $5000 million in funding from Tencent, they immediately invested in mobile game development, taking advantage of the launch of Apple and our smartphones to create a bigger pie in the market.”

"However, our Kunlun SDK system library is not very mature, and now may not be a good time to develop complex online games. But you don't need to do anything this year. After selling the agency rights, just draw up a concept and announce that you will make the first mobile 3D large-scale online game. Make a few PPTs and make the market dazzled. We will cooperate with you and announce that we will give you full technical support. The Kirin mobile phone concept and technology are very advanced, and the market will believe it."

"This!" President Lei's face turned slightly red.

How can I ever repay this kindness!

This concept is probably several times bigger than Kingsoft originally envisioned!

"As for your other software, focus your energy on developing it."

"The free version of WPS is good at attracting users, but for governments and large enterprises, a more expensive and feature-rich professional version and annual subscription service can be launched to make money from premium services and increase ARPU (average revenue per paying user)."

“Kingsoft Antivirus can also be offered for free to attract users to install it. They can then partner with companies like Xunlei, and when they detect that users are about to download something, they can recommend that users subscribe to Xunlei VIP. Kingsoft can then sell advertising and user referrals and make a profit from the revenue.”

"Also, let's revise your financial statements and capitalize the R&D costs, adding them to the balance sheet. Your profits this year will be very high. My people are very familiar with this; Gu'an has many accountants from the Big Four accounting firms."

"We'll adjust the listing timeline, targeting Giant Interactive. The listing date will be later than theirs, but very close. We'll spend some money with the Hong Kong Securities and Futures Commission regarding the scheduling."

Lei Jun immediately stood up: "Okay! Mr. Chen, what are your conditions for becoming joint consultants?"

Chen Xuebing laughed: "5% financing amount, is that expensive?"

Lei Jun's expression changed, and he hissed.

"That's so expensive!"

Kingsoft's IPO aims to raise at least 5-7 million yuan. If Chen Xuebing's plan is successfully completed, it could at least double, or even triple.

5% could amount to tens of millions, or even hundreds of millions.

"Mr. Chen, could you give me a discount?" Lei Jun asked hesitantly.

Chen Xuebing immediately waved his hand: "I will not lower the price. This is the going rate for Changzheng's future listing."

"However," he changed the subject, "you've heard the method, so we don't need to do anything. Tencent and Xunlei are here, you can negotiate yourselves, but you have to agree to two conditions."

"What conditions?"

"First, you must publicly thank Changzheng for its planning and assistance in Kingsoft's listing. Second, Kingsoft must fully develop a free mobile office product for the Kunlun system, which will be integrated into our service layer and must not contain advertisements. Of course, the copyright still belongs to you. In the future, if you want to develop similar office products for other mobile systems, you can embed advertisements, and you can charge for them."

The Nokia N95 has its own stock plugin and PDF reader, and is known as "the desk in the pocket of Wall Street elites," a title that Chen Xuebing is somewhat envious of.

However, simply making stock plugins and PDF readers is too mediocre.

A true office desk should be able to edit computer documents on your phone and send them via Starlink, right?
Someone has to do this free thing.

"Mr. Chen, I've made the decision. We agree to your conditions! Kingsoft will do it for you for free! Public thanks are fine too. We'll also add 2.5% of the financing amount, and you'll still handle the IPO. Consider it half of the software development cost, is that okay?"

Lei Jun thought to himself that this plan would probably require Qidian's cooperation, and since Chen Xuebing said it was free, he would actually take it and use it, and he would be embarrassed to see him again later.

Chen Xuebing thought for a moment, then chuckled and nodded: "Alright then, this price can't be told to outsiders."

Jack Ma suddenly said, "So, you mean you're going to talk to Tencent on behalf of Kingsoft? I think Pony Ma and Tencent see you as a major enemy. Why don't you, Lei Jun, talk to them yourself?"

Chen Xuebing chuckled softly.

“They see me as a competitor, so naturally they are hostile. But I have already said that I only work on the group’s major strategies and am not responsible for specific business operations. Externally, I am an investor; I invest in the internet industry, but I do not operate within it.”

"At most, I'm someone who provides good service for the internet, and our service won't refuse anyone."

(End of this chapter)