"Indeed, it is so!" Jobs nodded, then asked with full alert, "Then, what is the Chairman's intention? Is he going to hold me responsible?"
"Naturally, you are to be held responsible!" Little Swift nodded.
"Alright, then give me a few more days. After I complete the iPod sales, I will resign..." Jobs believed that the sales of iPod 3 would be quite good, enough to save him from the brink. After all, once iPod 3 was released, everything would turn around...
"Therefore, I hope Mr. Jobs can undertake the subsequent share issuance work!" Little Swift said.
"What... you're talking about share issuance?" Jobs was stunned and asked subconsciously.
"That's right, share issuance. I believe this is the best way to solve the current predicament!" Little Swift smiled and said, "Firstly, share issuance can expand Apple's capital capacity. Apple currently has a total share capital of 1 billion shares. We can issue an additional 200 million shares to the stock market. Calculated at the current stock price of $12 per share, 200 million shares can fetch $2.4 billion in cash, which should be enough for Mr. Jobs to continue leading Apple to flourish!"
"Mr. Little Swift, do you really agree to our share issuance?" Jobs looked at Little Swift in surprise, unable to fathom his intentions.
For investment companies like Little Swift, the most detested thing was likely share issuance.
Share issuance, in essence, was when a company decided to offer a batch of additional shares to shareholders or the stock market to obtain more operating funds.
These newly issued shares were identical to the original ones, which would inevitably dilute the stock price and the equity held by investors.
Take Apple as an example. Currently, Apple's total share capital is 1 billion shares. Little Swift holds 550 million shares, equivalent to 55% of Apple's stock.
Once an additional 200 million shares are issued to the stock market, Apple's total share capital will increase to 1.2 billion shares. Western Mustang Company's equity in Apple will decrease from the original 55% to 45.8%, a direct reduction of nearly 10%. This shifts them from absolute control to being the largest shareholder.
Although Western Mustang should still be able to firmly maintain control of Apple, if the board of directors unanimously opposes, Western Mustang will still encounter problems.
However, this aspect was not of much concern to investment companies, as they generally had no intention of interfering in the company's daily operations. The most fatal blow for investment companies was the change in stock price.
If Apple were to have no significant positive news to drive up investors' valuation of Apple, assuming the valuation remained constant, the share value would inevitably be diluted with the increase in total share capital.
Previously, Apple's stock was valued at $12 per share. After issuing an additional 200 million shares, the stock value would drop to $10 per share, equivalent to a direct reduction of $2 per share in the investment company's earnings.
Western Mustang Company, holding a total of 550 million Apple shares, would consequently lose $2 per share, amounting to an unimaginable disaster of $1.1 billion.
Thus, Jobs found it difficult to comprehend why Western Mustang Company would proactively suggest Apple issue more shares.
"I know what Mr. Jobs is thinking, but this actually has benefits for our company too!" Following Huang He's instructions, Little Swift said, "Actually, our company is currently facing a significant problem that will severely hinder the continued rise of our stock price!"
"Oh? What problem?" Jobs was not particularly interested in such financial matters; he just didn't want anyone to interfere with his control over Apple.
"It's the lack of liquidity!" Little Swift stated frankly. "According to our investigation, there are only about 150 million shares left circulating in the stock market. However, the number of shares traded daily is only a few hundred thousand!"
"Yet, the market demand for Apple stock is around 300 million shares. This indicates that many shareholders still wish to purchase Apple stock, but the limited supply of circulating shares forces them to pay higher prices to acquire them!"
"This has dampened the enthusiasm for purchasing stocks among both institutions and retail investors. If we were to inject 200 million shares into the market at this juncture, it would greatly alleviate this situation. Furthermore, given the high purchase intent, I believe that after the share issuance, the stock price will only experience a slight decrease, perhaps to around $11 per share, but certainly not to $10, as Apple's stock price is generally trending upwards!" Little Swift explained.
"In addition, there is a third benefit, which is to facilitate our cash-out!" Little Swift said very directly. "In a few months, it will be time for us to pay the first round of fund returns, and the company needs funds to make these payments."
"The best way, naturally, is to sell some of Apple's shares. However, the problem is that 55% of Apple's shares are concentrated in my hands. If I were to sell shares in large quantities, it would inevitably cause fluctuations in Apple's overall stock price, potentially driving it down from $12 back to the original five to six dollars per share in an instant. This is a situation we cannot afford."
"Therefore, I need to increase the number of shares circulating in the market. This way, when our company sells its shares, it will not cause large-scale price fluctuations, and the stock price can be maintained within a controllable range!" Little Swift laid out all his thoughts very frankly.
"So that's how it is!" Jobs was a smart man. Although he was not interested in finance, he understood Little Swift's words. From Little Swift's perspective, issuing more shares was indeed beneficial for Little Swift in the long run.
Furthermore, although most investment companies were reluctant to issue more shares, there were dozens of such cases annually, generally facing predicaments similar to Little Swift's.
"In addition, there is one last reason, but this is a personal reason and requires Mr. Jobs to maintain confidentiality for our company!" Little Swift said slowly.
"What reason?" Jobs asked curiously.
"How is our company's server demand currently?" Little Swift suddenly asked.
"Currently, the servers are sufficient, but there is always a deficit generated annually, and it is estimated that server resources will soon be in short supply!" Jobs did not understand Little Swift's intention but still answered truthfully, "So, as per usual, we will procure a batch of servers in about a month, with a total procurement amount of approximately $50 million. This is mainly to meet the storage needs of iTunes and other network services provided by Apple!"
"Fifty million is too little!" Little Swift waved his hand. "With the iPod selling like hotcakes, the Apple Store uploads a large amount of resources daily and updates user information. I estimate that the demand for servers next year will likely experience explosive growth. We should prepare around $300 million for servers!"
"Three hundred million? That's the usage for the next six years!" Jobs frowned. "Based on the current development trends, server computing power and storage capacity will continue to increase, but prices will gradually decrease. Therefore, the best approach is to continuously purchase the latest and most advanced servers based on annual demand, rather than procuring six years' worth of servers all at once!"
"That's not necessarily true. I've seen the latest iMac plan, which is an extremely massive undertaking. This will also greatly increase the demand for servers!" Little Swift said.
"This is just the usage for a software store; it won't be that significant!" Jobs replied.
"Oh, then what about the Apple phone? That product for which the brand 'iPhone' has already been registered!" Little Swift said slowly. Jobs's eyes widened abruptly, and he looked at Little Swift with disbelief. Did he underestimate this Black man?
"Sir, you keep asking about servers. Could your last reason be that you hope we will purchase around $300 million worth of servers?" Jobs squinted and pondered for a moment before a look of realization dawned on his face.
"Heh heh, so you've seen through it, have you? Alright then, I'll be frank. I've recently taken a liking to another company and plan to invest in it."
"However, this company needs a groundbreaking business to penetrate the product market, so I hope to get Apple's procurement!" Little Swift was indeed sincere and directly revealed his intentions.
"So that's how it is!" A smile appeared on Jobs's face. This explained everything. Western Mustang Company could not forever rely solely on Apple's stock; they needed to develop a second investment company. By leveraging a deal with Apple to have Apple procure servers from this company, they could give this small company a god-like start.
Of course, Apple would definitely be at a disadvantage in this transaction. The servers sourced by this small company were likely to be of poor quality and at a high price. Under normal circumstances, no company would be willing to procure them, so Little Swift had to persuade Apple to make the purchase.
Although Little Swift held controlling interest and was the Chairman of the company, everyone at Apple knew that Apple was now Jobs's Apple. If Little Swift dared to interfere with the company's procurement without Jobs's permission, especially for a massive $300 million purchase, it would undoubtedly trigger a strong backlash from Jobs.
If the matter were to escalate, and insider trading were exposed, Little Swift would likely face investigations from the relevant authorities.
Therefore, Little Swift absolutely needed Jobs's cooperation. And how could he persuade this stubborn individual to agree to such a deal?
There was only one way: to satisfy his desire for more funds by helping Apple secure $2.4 billion in liquid capital through share issuance for Jobs to use freely.
In that case, having Little Swift take out $300 million to procure a slightly inferior batch of servers would be a trivial matter.
This was a very genuine and typical commercial compromise. Although Jobs was a strong personality, he was not inflexible. He would not refuse this condition, as refusing it would mean losing the remaining $2.1 billion in funds.
"I can agree to this, but I hope it will be through a public bidding process to avoid any criticism. Moreover, the cost-effectiveness of these servers cannot be too poor, otherwise, I will not agree to the procurement!" Jobs stated.
"I completely agree with this. Rest assured, the servers this time are actually good quality and reasonably priced, just a new brand that no one knows about yet!" Little Swift said with a smile.