Heads Up Hollywood

New Global's IPO underwriters include six or seven banks, all of which are world-class financial giants.

The 0.8% commission... is really not enough.

The reason why everyone rushed to build a good relationship with New Global and wanted to undertake the IPO operation of New Global is because it is profitable, and it is a huge profit!

It is by no means comparable to the 0.8% dividend.

Wall Street investment banks, in effect, are both athletes and referees, taking advantage of this privilege to make big bucks.

For example, when Hollywood agents fight for the remuneration of their actors, all the remuneration will go to the actors, and the agent only takes about 10% of the share. If it is a superstar, the commission will be lower.

If an actor asks for a $10 million paycheck, the agent uses his abilities and connections to secure a $20 million paycheck. So can this $10 million price difference fall into the broker's pocket?

Of course not!

The 20 million US dollars belonged to the actor, and the agent still could only take a commission.

This is the intermediary.

Underwriters are essentially intermediaries.

But the big investment banks obviously don't have the professional ethics of a Hollywood agent, and they play a trick of eating at both ends.

Assuming New Global's IPO at an issue price of US$200, then New Global's 200 million shares can be accounted for US$40 billion.

If during the IPO process, the stock of New Global was sought after and loved by investors, and the stock price was fired up to $300, where did the price difference of $100 go?

The price difference of 100 US dollars is matched with the size of 200 million shares, which is 20 billion US dollars!

It's a huge sum of money!

Will the price difference go into New Global's account?

Won't!

New Universal will only get the issue price of US$200, and the subsequent price increase has nothing to do with New Universal. The $100 that has been speculated will fall into the hands of investors and investment banks who flipped.

What's more, big investment banks will play the trick of being both buyers and sellers.

For example, New Universal authorized the underwriting volume of 50 million shares to Citi Pictures. Citibank itself is the largest investment institution. If you see high-quality stocks, you can buy them yourself! Internal delivery, fast and convenient!

Therefore, this will make it difficult for investors to buy a large number of stocks from Citibank, because Citibank bought it first!

This will indirectly lead to fewer New Global stocks circulating in the market, and rare goods will be available to drive up the stock price. Citibank then took the opportunity to sell its stocks and make a lot of money.

Compared to the 0.8% commission, this is how Wall Street investment banks make money.

So it's clear.

On the surface, the higher the issue price of New Global, the higher the total amount of IPO financing, and the more bonuses the investment banks get, the more they earn.

Actually quite the opposite.

The lower the issue price is, the more favorable it will be for the investment bank to capture profits in the IPO process in the future!

Because once it breaks, the speculative behavior of investment banks will cause them to suffer huge losses.

This is a game process.

New Global wants to increase the issue price, and the underwriters want to lower the issue price.

Listing is a financial act, and New Global must rely on the major investment banks on Wall Street.

There are still a few big investment banks that did not participate in New Global's IPO, and the investment banks that have already cooperated dare not push New Global too far. If Tang En was annoyed, he broke up with the table and found another investment bank to cooperate with, then he would not be able to make any money.

Therefore, whether it is New Global or the investment banks, in the negotiation of the issue price, they must strive for it, and they must be restrained, so as not to squeeze the other party too hard.

To be profitable, everyone earns money together.

At this time, it is impossible to eat alone like New Global in Hollywood, because this is a cross-industry competition, and New Global has little power in the financial field, so it must rely on Wall Street and share benefits.

Relying is relying on, but what should be fought for must be fought hard.

If New Global earns more, Wall Street will earn less; if New Global earns less, Wall Street will earn more.

The wrestling in this will be very difficult.

Tang En convened this highest-level financial meeting today with the sole purpose of unifying his mind!

At this critical moment, no one can throw me off!

No matter who is lobbying behind you, no matter how important contacts are behind you, you can't back down at this time!

Grit your teeth and persevere!

The issue price of $408 is out of the question.

An issue price of $300 is also unlikely.

But Tang En made a request, a guarantee of 250 US dollars!

The issue price of US$250 is just enough to raise the market value of New Global to a height of US$300 billion.

This is New Universal's top secret.

No matter how hard Wall Street tries, this bottom line cannot be broken!

Hearing Tang En say that the bottom line of the issue price is 250 US dollars, many people in the venue were secretly relieved.

They were afraid that Tang En would really offer an issue price of US$300-408!

If New Global does this, Wall Street really has nothing to do.

But the next thing can be imagined, the IPO will definitely fail, the stock will definitely be unsalable, and then turn against Wall Street.

The cost of turning against Wall Street is too high.

The most typical is Elon Musk.

In his previous life, he repeatedly fought against Wall Street, and then Tesla, which he managed, encountered frequent short-selling crises, and the stock price plummeted frequently. Several major investment banks jointly downgraded their ratings and lowered their expected stock prices, which led to market crashes. For this reason, what's the use of Elon Musk crying on TV several times and denouncing the despicability of short sellers?

Financial markets are in the hands of Wall Street.

This is someone else's territory, and if you don't obey, you will be beaten.

Wall Street must not be turned against for short-term interests.

Tang En naturally understood this truth.

Otherwise, he would not have withdrawn from the stock market after taking advantage of the "September 11" incident. In fact, he also knows too much about futures, oil, and short-selling signals on subprime mortgage real estate.

But he can no longer operate.

This is tantamount to stealing money from Wall Street, repeating again and again.

The relationship with the big banks on Wall Street must not deteriorate.

...

On the second day, Tang En received a fax letter from Citigroup, the general counsel of the new global listing.

The content of the letter is high-sounding, claiming that "because New Global's second-quarter financial statements are particularly beautiful, the market's expectations have been greatly improved. After research by several chief economists from investment banks such as Citigroup, Goldman Sachs, and Morgan Stanley, it has been decided to substantially raised the expected release price of New Universal! to $196!"

The content of the letter is very long, and the various basis for the investment bank's issue price of $196 are also marked below.

One of the most important one is to lower the price-earnings ratio.

Very simple, the issue price is the opportunity of the net profit per share and the price-earnings ratio, which is a linear relationship.

Net profit is the exact data. If you want to lower the issue price, you can only lower the price-earnings ratio.

The reasons given are also strong.

New Universal's profit in the first quarter was only US$1.3 billion, but its profit in the second quarter soared by US$2.7 billion to US$4 billion!

Why?

The most fundamental reason is that starting from the second quarter, New Global opened up a new business.

Dolby DVD players are now on sale!

This highly compatible DVD player, which can play DVD, HD-DVD and Blu-ray formats, is still the most advanced player in the world so far, and the price is as high as $1299!

Since its launch in April, the global sales volume has exceeded 3.28 million units, creating a revenue of US$4.26 billion for New Universal, with a gross profit of US$3 billion!

Almost half of New Universal's net profit of US$4 billion in the second quarter came from Dolby DVD players!

There is no technical difficulty in things like DVD players.

The reason why Dolby DVD players can make so much money in a short period of time is because there is currently only one highly compatible DVD player in the world, monopolizing the market. After a while, other manufacturers will produce similar products, and the sales of Dolby DVD players will definitely decline significantly.

This is one of them.

Second, Dolby DVD player is a hardware product, and it is not a high-tech hardware product like Cisco or Qualcomm, but a very common functional hardware product. This type of hardware business has a lower price-to-earnings ratio, usually between 10-12.

Such a low price-earnings ratio for the Dolby DVD player business with such a high weighting ratio will greatly lower the overall price-earnings ratio of New Universal Group.

In the past, investment banks assessed New Global's price-earnings ratio to be between 30-35.

Now it has changed, it is between 15-20.

doubled in size.

According to such a price-earnings ratio, it is normal to give an issue price of US$196.

Because the net profit is certain, the issue price dispute is essentially a price-earnings ratio dispute.

Of course Dunn would not be satisfied with the answer given by the investment banks.

The Dolby DVD player business has low potential and low leverage, and that's okay.

However, in the evaluation of Wall Street, they only saw the Dolby DVD player business, but did not see the two trump cards of Facebook and Netflix!

For these two Internet companies, the leverage of 500 times is not too much!

Wall Street is a typical example of grabbing small and zooming in!

In the future, Netflix will not split with New Universal, and Facebook will definitely split. It will be a giant.

Now it cannot be split.

Facebook's money-burning property is too strong.

Once split, New Global and Facebook will become two companies, and New Global will have to use all resources to support Facebook regardless of cost and consequences.

At that time, Facebook, which operates independently, will definitely look for other foreign aid in order to develop, and even give up a lot of shares to attract strong aid. This will in turn further dilute the stake.

The best result is to go public now and use the power of New Global to help Facebook develop.

After facebook becomes bigger and stronger, it will be split off and facebook will be listed separately.

Such a potential trump card is hidden inside New Global. In Tang En's view, the current price-earnings ratio assessment of New Global is not too much between 30-35.

The price-earnings ratio of 15-20 proposed by Wall Street is really ridiculous!

"Returning to the past, let's say that New Global's internal issue price assessment is 300-408 US dollars, even if it is the minimum standard of 300 US dollars, it is very different from their assessment of the issue price of 196 US dollars. In view of the respect for Wall Street, I would like to Take a step back and drop... $4! Just $296!"

Game, seesaw, bargaining.

Tang En looked amicable, with a peaceful expression.

It seems that he intends to fight the big investment banks on Wall Street.