Capítulo 265: Chapter 265: Cisco
[Chapter 265: Cisco]
Seeing Eric nod, Chris let out a sigh of relief and continued, "But, Eric, if -- I'm saying if -- you can ensure that Firefly Films can keep growing as rapidly as it currently is, then it might be best not to go public. Many companies that went public years later sought to become private again. Going public may provide a huge influx of capital, but it also comes with greater responsibilities and risks. Just look at Hollywood; major studios have faced hostile takeovers. The most recent one happened in 1984 when Disney was aggressively targeted by Saul Steinberg. Ultimately, Disney had to pay $325 million to buy back 11.1% of its shares from Steinberg. Back then, Disney's market value was less than $2 billion. That $300 million hurt Disney considerably, forcing them to abandon their family-oriented management style and bring in Michael Eisner to steer the company."
As he spoke, Chris chuckled and added, "Of course, it's now clear that Disney made a very smart decision by taking those risks, turning a setback into an opportunity. But not every company shares that sort of luck. Firefly is growing rapidly right now, and if it goes public, it could attract even more attention."
Eric listened patiently, occasionally nodding. Once Chris finished, Eric had made up his mind: Firefly should remain private forever.
"Chris, do you think it's possible for Firefly to remain private indefinitely?"
"Absolutely," Chris replied without hesitation. "Most companies go public to secure more funding, but Firefly isn't lacking for cash. So why go public?"
As they were talking, Jeffrey emerged from the kitchen, calling the two of them to come eat.
...
In the dining room, Eric also met Chris's girlfriend, Emily Brighton. She had a tall figure, blonde hair, and blue eyes, dressed very stylishly. During introductions, Eric learned that she was the vice president of a clothing company called Brighton Apparel. Given her last name, the company name, and the fact that she was too young to have built it herself, it was clear she was the daughter of the company's owner.
Emily was much more talkative than Chris. When she met Eric, she let out a squeal that only true fans could muster, expressing how much she enjoyed Eric's movies. At the dinner table, she not only shared how she and Chris met but also encouraged Aniston to become a spokesperson for their fashion company.
Aniston, faced with Emily's enthusiasm, didn't know how to decline and looked desperately at Eric for help. Although she was still just a television actress at the time, her fame was rising thanks to Friends. On the other hand, Emily's fashion company didn't have much recognition, and Aniston joining would feel like a step down for her.
Before Eric could speak, Chris noticed Aniston's discomfort and rescued her by saying, "Emily, can we just eat quietly? Your company is too small. I think it's enough that some second-tier star is the spokesperson."
Emily, hearing this, wasn't pleased. She frowned and said, "That's all your fault. If you hadn't messed up our plans to go public, our three plants in Florida would have been up and running by now, along with that $9 million order from Asia..."
"That's hardly my fault; your dad was too greedy. He inflated the company's credentials and got caught."
"That was because you were the one who found out!" Emily pouted, looking like a wounded fawn. "All companies do this when they go public; why shouldn't we?"
Chris put down his fork and knife, raising his voice in rebuttal, "Do you still not see how much your dad inflated the numbers? It's a blessing I caught him; if the SEC had found out, your company would've been fined into bankruptcy by now!"
Hearing the barely concealed anger in Chris's tone, Emily sheepishly shrank back and muttered, "Well, my dad corrected it later..."
"That was after Mr. Hawkridge rejected it! Don't forget, you almost cost him his job. It's a miracle he didn't take it to the next level."
Eric glanced at Drew and Aniston, both sitting beside him, exchanging worried looks.
Are they really starting to fight? They couldn't break up right here, or the three of them would be in serious trouble today.
As he silently prayed for calm, Jeffrey, seated at the head of the table, coughed softly. "Okay, enough. Let's not argue."
Both Chris and Emily, who were already 'in the zone,' snapped back to reality upon hearing Jeffrey's voice and quickly closed their mouths. To keep the atmosphere lively, Eric jumped in to initiate another topic, gradually lightening the mood at dinner.
...
After dinner, Emily pulled Aniston and Drew into another room to chat, leaving the three men alone in the living room.
At that moment, Eric apologized, "Sorry, Chris, about what just happened at the table..."
"Eric, this isn't on you. Don't worry about it," Chris replied, shaking his head.
Jeffrey, filled with a sense of nostalgia, added softly, "It can be good to let a little steam out. Back when Solina was around, we used to bicker all the time too."
"Dad, can we not bring those things up anymore, please?"
"Sure, I won't mention it again," Jeffrey said, knowing his son had his best interests at heart.
As they chatted, Eric gradually steered the conversation towards topics that interested him: "Chris, are you familiar with foreign exchange trading?"
"I know a bit, but I haven't participated in any projects like that. I'm currently working in the securities department."
"Can you trade foreign exchange? Like the yen? It seems to be appreciating tremendously right now."
Chris shook his head. "The yen has already doubled in value. Even if you had the cash, you wouldn't make much entering now."
Eric paused, regretting he hadn't paid more attention to Japan's economic history in his past life. Hearing Chris's points, he decided to let it go, but another significant opportunity hadn't yet arisen. "What about the ruble? Are you familiar with the Soviet ruble?"
Chris cautioned, "Eric, I really think you should just stick to making movies. The forex market isn't for everyone. Sure, the yen has appreciated dramatically over the last few years, but international hot money hasn't made the wild profits you might think. The federal government simply used the yen's appreciation to diminish Japanese goods' competitiveness in international trade, leading to massive capital flight from Japanese companies and ultimately causing the bubble to burst and their economy to stagnate."
"Alright, but have you all noticed that the Soviet Union seems to be crumbling?"
Chris shrugged. "That's certainly a possibility, but who knows when it'll actually happen? Even if the Soviet economy collapses, since the country has enforced a fixed exchange rate for the ruble, we wouldn't be able to get involved."
"Okay, but have you considered the possibility that if the numerous Soviet republics collapse and all return to capitalism, during that economic upheaval, the ruble would undoubtedly crash? That could present a fantastic opportunity, don't you think?"
Chris and Jeffrey exchanged glances, both looking at Eric with curiosity. After a moment, Chris smiled and said, "Eric, if you share that viewpoint publicly, it might gain quite the following. If the Soviet Union really falls apart, then we'd no longer have to worry about the threat of nuclear war. Remember how the whole world was terrified when they detonated that bomb in the Arctic Circle, the 'Tsar Bomba'?"
Eric felt a bit helpless. While Eastern Europe was already transitioning, and East and West Germany had unified that August, there were still almost two years until the Soviet Union, as he remembered it, would collapse. Plus, with the half-century-long rivalry between the U.S. and Soviet Union, despite being often demonized, Soviet power was undoubted. Few would believe such a vast nation could disintegrate in mere months.
"Let's hypothetically consider this," Eric continued. "If the Soviet Union were to collapse and the ruble depreciate significantly, if I were to put $1 billion into trading the ruble, using hundreds of times leverage, could I possibly multiply that amount many times over?"
Jeffrey didn't respond, but Chris looked at Eric like he was crazy. "Don't be ridiculous; even if you had $1 billion, using more than 100 times leverage in such a drastic financial upheaval, you could lose it all within minutes."
Eric blinked in surprise. "Well... okay, I don't really understand all this."
Chris realized Eric hadn't even been to college, just a normal high school graduate, so he patiently explained, "Take your example of 100 times leverage. If you invested $1 billion, you'd magnify it to $100 billion for forex trading. But your $1 billion only stands for 1% of that $100 billion, meaning you could only withstand a 1% fluctuation in the forex market. Even if a currency is generally on a downtrend, there are fierce fluctuations due to the competition between buyers and sellers. If that currency rises over 1% at any point, whether you invested $1 billion or $100 billion, you'd be liquidated immediately. Generally, in the forex market, leverage usually ranges from 20 to 30 times; occasionally, some take risks with 50 times leverage."
"Uh, okay," Eric chuckled awkwardly, shrugging. "Just forget I mentioned it."
Seeing Eric's discomfort, both Chris and Jeffrey laughed. Chris added, "The more volatile the financial market, the lower the leverage you'd want to ensure your capital's safety; if a good opportunity does arise, taking $1 billion to double it is already quite impressive."
Since forex trading seemed off the table, Eric thought it would be better to invest in something he was more familiar with, and besides movies, that was just the up-and-coming IT industry set to boom over the next twenty years.
He felt several major software companies were no longer an option; the internet wasn't fully developed yet, and the timing for various network companies hadn't arrived. As for hardware, Eric had long been eyeing Apple, but with Steve Jobs's future uncertain and Apple not on the brink of bankruptcy, what were his other options?
After pondering for a moment, a name flashed into his mind.
Cisco?
Cisco!
Eric slapped his forehead, almost bursting with excitement. In his previous life, it had been a giant with a market capitalization that soared to $500 billion by the time of dot-com-bubble.
*****
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