I am Hollywood

[Chapter 1070: Shocking]

Unlike the typical end-of-year blockbuster news that dominated the media's entertainment section, Yahoo's IPO became a significant news event at the societal level.

The Nasdaq Composite index broke the 2,500-point mark this week, and the market values of major tech companies hit new highs. According to the closing data Eric obtained when he arrived in New York on Wednesday, Microsoft, the undisputed king of the Nasdaq market, had an astonishing market capitalization of $335.9 billion. In addition, other leading tech stocks included Intel with a market value of $157.2 billion, Cisco at $133.5 billion, America Online at $66.7 billion, and SUN at $38.6 billion...

Even for Microsoft, which had the most impressive earnings, the price-to-earnings ratio had soared above 100, reaching bubble levels. Therefore, the Nasdaq market could only be described as "shocking" at this time.

By the end of the first three quarters, Yahoo had already achieved $1.296 billion in revenue, surpassing last year's total of $636 million by more than double, and the company's annual revenue growth rate was still expected to be nearly 200%. However, even at a share issuance price of $33, Yahoo's market value of $33.7 billion, combined with the earnings forecast provided by Yahoo, would still lead to a P/E ratio of around 200 times.

Typically, unless investors are extremely optimistic about a company's growth potential, a P/E ratio over 30 makes it challenging for that company to attract investment.

It was clear that rational investors had nearly vanished from the Nasdaq market. With the lure of massive short-term arbitrage profits, everyone was making wild bets while secretly praying they wouldn't be the last person to hold onto shares before a potential Nasdaq collapse.

Yahoo was going public in this near-paranoid atmosphere, making the timing exceptionally sensitive. Although they had successfully exceeded 15% subscription above their offering amount in the preliminary offering process, no one, not even Eric himself, dared to confidently predict whether Yahoo's stock would officially begin trading without it becoming the last straw that broke the camel's back.

As a result, everyone adopted a mindset of preparing for the worst while hoping for the best. In the days leading up to the listing, the entire Firefly Group was working tirelessly on final preparations for Yahoo's IPO.

...

After a day of non-stop busyness, Eric planned to invite the upper management of Firefly Group, who had come for Yahoo's bell-ringing ceremony, to dinner that evening. However, he received an urgent phone call and had to rush to the Nasdaq exchange in Midtown.

Although there were still over 12 hours left before the trading began, the area outside the Nasdaq building on 42nd Street was already crowded with reporters from all corners.

As soon as Eric's car pulled up to the exchange, the sharp-eyed reporters quickly surrounded him. Countless hands holding cameras and recorders reached over the bodyguards guarding Eric. A loud-voiced reporter pushed his recorder forward, trying to drown out the surrounding noise while asking, "Mr. Williams, we just received news that the Yahoo team seems to have clashed with the Nasdaq executives inside the exchange. Are you here to resolve the situation?"

Taken aback by the unexpected question, the other media personnel around paused, abandoning their prior inquiries, and eagerly hoped Eric would address the reporter's question.

Struggling to make his way through the crowd of reporters into the building, Eric adjusted his suit, glancing around anxiously before turning to his bodyguard, Carter Moen. "Where's Mary?"

Carter replied, "Miss Mayer is still in the car. The crowd is too chaotic, and I just suggested she wait until you go in before coming over."

Eric nodded and waved to Steve Mitnick's assistant, quickening his pace towards the Nasdaq exchange's main hall.

Unlike traditional stock exchanges such as the New York Stock Exchange or the London Stock Exchange, Nasdaq was actually an acronym for the "National Association of Securities Dealers Automated Quotations," representing the world's first electronic stock trading platform, where transactions were typically conducted via phone and computer.

Thus, the Nasdaq located in the building on 42nd Street functioned more symbolically, lacking the comprehensive hardware and software facilities of the NYSE. Instead, it had several setups around the hall designed for broadcasting exchange news to global audiences, resembling a television studio.

In contrast to the non-profit, public service organization that the New York Stock Exchange represented, Nasdaq had long been able to compete with the NYSE in terms of the scale and volume of listed companies, yet it was still owned by the Nasdaq Group and operated as a profitable private company.

Seeing Eric arrive, the two opposing sides immediately approached him.

Nasdaq CEO Frank Zarb was visibly agitated, raising his arms and speaking first, "Eric, I can hardly understand why you felt the need to suddenly conduct technical repairs and stress tests on Nasdaq's trading system. It's utterly unreasonable. I know how much you value Yahoo's listing, but the Nasdaq platform has been around for 27 years now, and we have never delayed any company's listing due to technical issues -- there's simply no need for your demands. Moreover, even if it were necessary, it should be our own technical team handling it. We cannot allow external parties to test our servers."

Listening to Frank Zarb's complaints, Eric looked at his watch and interrupted him, "How long does your technical team need for repairs and tests?"

Frank paused in his arm-waving and replied, "Eric, this is completely unnecessary."

"I insist," Eric said, his voice growing colder, his gaze locked on Frank. "Or, you can continue to refuse, and I'll cancel tomorrow's listing. There's a large crowd of reporters outside; we can hold a press conference to announce it right now. So, how long do you need for your team to conduct these repairs and tests?"

Eric's insistence that the Nasdaq conduct system equipment repairs was certainly not unreasonable or overly anxious. In history, Facebook had encountered a system failure on the day of its IPO, resulting in tens of billions of dollars' worth of trading orders being unable to be processed smoothly. This incident significantly contributed to Facebook's share price dropping below its IPO price on its first trading day because of a poor start; the company's market capitalization dropped to around $30 billion, less than a third of its market cap on its debut day.

Thus, if Frank Zarb truly refused to compromise, Eric would not hesitate to hold an impromptu press conference to announce the cancellation of Yahoo's IPO.

The sudden pressure Eric erupted with caused Frank Zarb's resolve to soften. If the IPO operations for Yahoo were indeed canceled at the last minute, while Firefly might face unpredictable losses, Frank Zarb as CEO of Nasdaq would undoubtedly be ousted by the board.

Swallowing hard, Frank finally refrained from uttering another hard-line statement. However, as the head of the group, he didn't even know how long it took to conduct repairs and tests on the Nasdaq trading system. After a brief moment of hesitation, he replied with an estimate that was not too precise: "Approximately five or six hours."

"Since the market closed at 4 PM, you've already wasted an hour and a half," Eric replied, knocking on his wristwatch. "So, immediately call your technical team together, and Steve and his team must assist and supervise as necessary. I don't care if it takes six hours or twelve hours; just make sure it's done before trading starts tomorrow. Any objections?"

Frank Zarb shook his head, his tone strained, "No, no problem."

"Then let's get started," Eric said, glancing around before walking over to a nearby camera and sitting down on a chair, propping his arms on it as he watched the gathered crowd.

Frank Zarb understood he could not afford to stall any longer and took out his phone to start calling.

...

Steve Mitnick gestured for everyone to disperse, walked over to Eric, took a chair, and said with a wry smile, "I argued with the people in charge here for an hour, and then Frank came over and we argued for another half hour, and the only choice left was to call you."

Eric shook his head, indicating it was no problem, then added, "I'll be having dinner with Ian, John, and the others later, so you might have to be here the whole time."

"That's okay," Steve chuckled, "I'm about to become a multi-millionaire and I can hardly believe it. My parents never really supported my interest in computers; they thought I was wasting my time and were often worried I'd end up homeless."

After the recent stock split and the last equity incentive plan before the IPO, both Ian Gurney and Steve Mitnick held a total of 16 million shares each, which meant that at the $33 issue price, both of their net worths had already surpassed $500 million. Additionally, Tina Brown held 6 million shares, which was also worth close to $200 million.

This meant that even before going public, Yahoo had already created three multi-millionaires. Besides the three core executives, there were also another 48.5 million shares allocated among Yahoo's various management and elite employees. Once the company went public, Yahoo would instantly create over ten multi-millionaires and hundreds of millionaires -- something extremely rare in the history of global corporate development, which some media labeled a sign of the tech bubble.

Seeing the somewhat reflective expression on Steve's face, Eric smiled and said, "Well, now you can tell your parents and give them a shock."

"My mom was already shocked," Steve replied, a teasing grin on his face, "She thinks you, as the boss, must be out of your mind to give away so much money to employees."

"It's true; I feel a little heartbroken too," Eric pretended to clutch his chest and joked.

Despite this playful banter, Eric had always been comfortable with such a large-scale equity incentive plan. Such high incentives were tied to strict non-compete agreements.

In an era where internet companies were sprouting up like mushrooms after rain, the elite at Yahoo, who had been with Eric since the inception of the three companies in the internet sector, could easily attract venture capital and swiftly go public to amass wealth if they decided to leave Yahoo and go solo. They could even become competitors to Yahoo.

In reality, such scenarios never materialized. Yahoo had maintained an absolute dominance in mainstream internet services -- portal websites, email, instant messaging, browser software, and, more recently, search engines. Besides Jeff Locke and a few others who left when the first equity incentive plan launched three years prior, the turnover of core executives at Yahoo had been remarkably low due to the company's generous equity incentives and strict non-compete terms.

While the total book value of the 96.5 million share equity incentive plan exceeded $3 billion, Eric's net gains were $30 billion. Investors with a bit of foresight would clearly understand how to navigate the pros and cons involved in this matter.

Whilst chatting with Steve and keeping an eye on the exchange, Eric didn't leave until Merissa Mayer arrived with her phone, having received a call from Ian Gurney and others at the Plaza Hotel. He then left for the evening's banquet.

...

The next morning, Eric awoke in his top-floor apartment on Sixth Avenue at seven o'clock.

When he arrived at the downstairs restaurant, Merissa Mayer had already prepared breakfast. As Eric sat down at the table, the female assistant handed him a stack of sorted newspapers.

"I'm not reading today," Eric shook his head and said, "We need to be at 42nd Street before eight o'clock."

Merissa Mayer put the newspapers away, served the two breakfasts, and sat down opposite him. "Mr. Mitnick sent a message at four in the morning -- they've completed the repairs and tests on the Nasdaq trading system. The technical teams from Yahoo and Nasdaq are still on site to ensure today's trading goes without any mishaps. Furthermore, Mr. Katzenberg arrived in New York last night at nine, while you were still out with everyone. He said he would go directly to the Nasdaq exchange today."

Eric poured some milk into his cereal and nodded, "Good. Anything else?"

Merissa continued, "The midnight screening for Mission: Impossible 3 grossed about $9.2 million, which is less than the summer releases of Charlie's Angels 3 and The Matrix 2."

"That's still pretty good."

Eric didn't feel disappointed; North America had just experienced a significant drop in temperature, and many areas along the East Coast had already seen snow. People were generally reluctant to go out during the day, let alone venture out for a midnight screening. Given the circumstances, holding over $9 million for the midnight showing of Mission: Impossible 3 was almost impressive.

After Merissa reported a few more things, Eric looked at the young woman across from him and said, "Speaking of which, Thanksgiving is just around the corner. Once we get through today, I'll give you some time off to go home and be with your family for Thanksgiving. You can come back next week or the week after."

Caroline was still recovering, and Merissa instinctively wanted to ask Eric what would happen if she left him, but suddenly remembered something and closed her mouth, merely nodding gently.

...

After breakfast, Eric took Merissa with him to the Nasdaq exchange on 42nd Street. Compared to the previous afternoon, even though it was not yet eight o'clock, the Nasdaq exchange was buzzing with life, with many guests who specifically came to support Yahoo's listing arriving even earlier than Eric.

Greeting everyone warmly, Eric was somewhat surprised when he spotted two bright figures in the crowd. He exclaimed, "What are you two doing here?"

Cindy waved her name tag at Eric and said, "As a star user of Yahoo blogs, Ms. Brown personally called and invited me to come and support Yahoo."

Eric laughed, glancing at Linda, who stood beside Cindy, "What about your name tag?"

Linda reached for Cindy's name tag but was brushed off, appearing a bit pouty as she raised her chin and said, "Nope, just kick me out."

Cindy stepped over, linking her arm with Eric's, and leaned in to whisper with a smile, "She's invested $1.5 million, sinking all her savings into this."

"A big client, huh?" Eric smiled, pulling the sulking Linda closer. "Alright, you can join me on stage to ring the bell later. But I have to say, if you're stuck with losses, that's not on me."

"I saw through you ages ago," Linda said with an unwilling smirk, gently pinching Eric's waist, "Irresponsible man."

*****

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