I am Hollywood

[Chapter 1162: A Dazzling Display of Wealth (3)]

Bill Gates listened to Eric's words and remained silent for a moment before saying, "Eric, I can't agree to all your conditions. It would put me in a difficult position in front of the board."

Eric shook his head, "Once Microsoft gets broken up, you will lose all fundamental advantages in your business outside the Windows platform. I think that's what you should be most concerned about, rather than the opinions of those board members."

Bill Gates' mind raced as he suddenly realized something. He said, "Eric, if Microsoft gets broken up, you will also lose a strong competitor, which is far better than keeping Yahoo's browser as the default. So, why are you bringing this video out? Or have you realized that given the current situation, the federal government likely won't dare to make a move to forcibly break up Microsoft, further stimulating the new tech market?"

Eric never considered Bill Gates to be a fool, and he wasn't surprised to hear his comments. He replied, "Without this video, even if Microsoft isn't broken up, it will undoubtedly suffer severe damage. Besides, the government has a bad habit of not admitting its mistakes, even when it recognizes them, and perpetuating them instead. So your analysis is just a possibility. As for the benefits to the Firefly Group from Microsoft's breakup, I'm certainly aware of them. However, in the grand scheme of things, once Microsoft is split, the Yahoo companies within the Firefly system may very well face the same fate. I know exactly how to choose between lesser evils."

Bill Gates scanned the folders and his laptop on the table for a moment before saying, "Eric, I can't give you an immediate answer. And regardless, some details in this contract must be renegotiated. At the very least, the Yahoo browser should show some favor towards Microsoft's internet business, and Microsoft should also retain the right to release its browser."

With the advantage clearly shifting to Eric, he wasn't going to make unnecessary concessions. He raised a finger and said, "There is only one condition to negotiate, and that is the pre-installation fee for the Yahoo browser. Bill, the situation has changed; the internet bubble has burst, and Microsoft doesn't need to be distracted by this business anymore. The market share of MSN portal was never high to begin with, and it will just become more insignificant. Ensuring that Microsoft isn't broken up is the only thing you should focus on."

Bill Gates opened the documents in front of him again, searched for a moment, and lifted his head to say, "There's one more condition: Microsoft cannot sign a five-year contract with Yahoo, at most two years."

Eric countered, "Three years."

Bill Gates insisted, "Raise the pre-installation fee for each operating system to $5."

"Five dollars? Bill, do you think that's possible?"

Currently, Microsoft sold about 50 million copies of its operating system each year. If Gates directly increased Eric's offer fivefold, Yahoo would need to pay $250 million annually, which exceeded Yahoo's current annual marketing budget.

However, Gates' tone remained firm, tinged with clear resentment, "Eric, that's what Microsoft deserves. Giving up that stock subscription agreement meant Microsoft received nothing over the past five years, and Yahoo needs to compensate adequately."

Eric, unfazed by Gates' resentment, even felt somewhat amused. He replied, "Our initial partnership was voluntary for both parties, and Microsoft also acquired all the necessary patent licenses related to web browsers. Moreover, if you feel entitled to compensation simply because you feel wronged, how should Microsoft compensate Apple for copying the Mac system to develop Windows?"

Microsoft initially served as an application software supplier for Apple. Gates developed Windows under inspiration from Apple's Mac system, violating the restrictive agreement signed with Apple and plagiarizing many graphic interface patents from the Mac system. Litigation over the patents lingered for over a decade until Steve Jobs returned to Apple two years ago, finally reaching a settlement.

If not for Apple's oversight back then, there wouldn't be a Microsoft today. Similarly, if Gates hadn't overlooked things five years ago, Yahoo's recent development would not have been so smooth. Without their initial partnership, Microsoft would have surely been a roadblock in Yahoo's effort to establish a unified internet technology standard.

Yet, the world is full of "what ifs," and only one outcome remains.

Bill Gates was extremely sensitive to any accusations regarding his history of copying the Mac system. When he heard Eric's words, his expression turned sour: "Eric, I don't want to hear your nonsense. If you want to cooperate, you can only accept my offer."

Eric gestured towards the door, "Suit yourself."

Bill Gates nearly stood up to walk out in a huff. After a moment of restraint, he pointed at Eric's laptop and raised his voice, "If I leave, this worthless video of yours will be useless!"

"You're mistaken, Bill, I can show it to Thomas Jackson, and maybe he will make a final ruling on breaking up Microsoft within a month."

"You won't succeed!"

"Well, let's see."

The atmosphere fell into a deadlock once again.

After a full minute, Eric finally spoke up, "Three dollars, that's my absolute limit."

Bill Gates' eyes flickered, but he didn't press further. He said, "I need to discuss this with Paul, Steve, and the others."

"No problem," Eric nodded, realizing this was just Gates unwilling to give a quick agreement. He didn't say anything more, and gestured toward the west over the Hudson River, "Want to stay and watch the fireworks? We really have a shipful."

Bill Gates glanced at Eric's laptop again, snorted, and without a goodbye, headed for the rooftop door.

...

Eric remained seated, staring at the coffee on the table, suddenly realizing that next time he met with Gates, he should definitely avoid putting any food or drink between them.

With that thought, he chuckled quietly to himself.

He went back downstairs for a fresh pot of hot coffee, returned to the rooftop, and sat down again. The last sliver of sunset on the distant horizon faded away gradually.

As night fell, and nothing could be seen anymore, Eric held a cup of coffee, quietly leaning back in his chair and gazing at the sky to the west.

At eight o'clock, a loud blast erupted from a barge on the Hudson River, followed by the explosion of colorful fireworks filling the Manhattan sky, adding an extra touch of glamour to the vibrant city.

This sudden fireworks display lasted a full hour, drawing countless onlookers from both banks of the Hudson River and sparking discussions in the media and public in the days that followed.

Many naturally connected this strange fireworks show with the recently crashed Nasdaq stock market and even generated various intriguing rumors.

Some claimed it was a hedge fund mogul celebrating billions made by shorting the recently collapsing Nasdaq with this fireworks display.

Others suggested that a billionaire, having lost their entire fortune in the crashed Nasdaq market, used the last of the money on their credit card to pay for the spectacle.

Still, others said this was a mocking gesture by a large company that had always been bearish on the prospects of new technology, laughing at the recently collapsed Nasdaq.

...

Regardless of the rumors, one fact remained -- the Nasdaq market crash showed no signs of stopping as the new week began, and instead worsened.

From July 26 to July 30, for five consecutive days, the Nasdaq index further declined, dropping from the previous week's 4373 points to 3525 points, a total decline of 19%.

Even some tech stocks that had managed to hold steady the week before began to falter, following the overall downward trend.

As of the close on July 30, Microsoft's stock price fell another 17.3% within the week, plummeting its market value from $469.9 billion last Friday to $388.6 billion.

However, in the face of the deep decline in stock price, Microsoft appeared less active this time, clearly having some backup. After meeting with Eric, Bill Gates also had not immediately responded to Eric in the following days.

Everyone understood that since a crash had occurred, the Nasdaq index's decline wouldn't stop until most of the bubble was squeezed out.

Thus, Eric was in no hurry; Microsoft had no other options to resolve its troubles in the short term aside from the leverage he held.

Although Yahoo's stock price also fell 22.6% again in the second week, and other companies in the Firefly system faced heavy losses as well, Eric didn't focus excessively on the Nasdaq market.

Faced with the overwhelming trend of decline, Yahoo didn't immediately release positive news like financial results; doing so now would only backfire.

With a sufficient series of advantages, Eric was confident that Yahoo could maintain a market value around $100 billion once the majority of the bubble dissipated.

Beyond Yahoo, Cisco's stock price plummeted without any controllable factors. Industry estimates suggested that Cisco's stock price might ultimately drop over 80%.

However, the company already had a very stable revenue and profit model; a stock price crash wouldn't be fatal for it. Even with an 80% drop, Cisco's market value would still exceed $100 billion.

Ultimately, while every startup in the Firefly system had serious bubbles, they generally showed clear prospects for development. The capital reserves within the Firefly system were sufficient to support any of these companies to continue growing.

In contrast, as articulated in a detailed analysis two weeks ago in Barron's magazine, most new tech companies in the Nasdaq market would struggle to survive after spending the funds raised during their IPOs, and many of them would inevitably vanish.

Nonetheless, the massive industry propped by hundreds of billions of dollars in speculative capital had too much attractiveness.

Once share prices reached the bottom, the Firefly system would be able to acquire the companies it needed at minimal costs, further expanding its footprint in the new tech field.

With a cool gaze on the spectacular scenes in the Nasdaq market, Eric's focus shifted back to Hollywood.

...

Unlike the series of new tech companies under the Firefly Group that were seeing their stock prices tumble, the group's valuation remained unscathed due to the explosive performance of The Blair Witch Project earlier in the year and merchandise related to Cars recently.

Some media, hearing hints of insider insights about the Clover Fund, even suggested that the Firefly Group's performance this year would create an unprecedented miracle.

In reality, that was indeed the case. Just in the first two quarters of 1999, the net profit from the Firefly Group's main business reached $2.285 billion.

In the second half of the year, supported by the hefty income from Cars merchandise and the upcoming reality show American Idol on ABC, along with the Firefly Productions' "4200" project, featuring both Gravity and The Lord of the Rings, it was foreseeable that the next two quarters would yield even better profit results for the Firefly Group.

Considering the tens of billions in cash that Clover Fund successfully cashed out, the total net profit for the Firefly Group in 1999 would reach $40 billion. If this were exposed, it would undoubtedly become a miraculous annual profit record in the history of American enterprises.

However, over the past two weeks, what truly captured Eric's attention in Hollywood was the recent release of Shrek on July 16.

Blue Sky Studios' new work following Ice Age had received a lot of praise during its small-scale test screenings for its creative anti-fairy tale narrative.

However, the film's opening week box office did not meet expectations, only grossing $56.49 million.

Given that another recent live-action-animation hybrid from Columbia, Stuart Little, had performed poorly, Eric initially thought Shrek wouldn't be able to replicate any previous box office miracles.

Fortunately, Blue Sky Studios was able to control the production costs of Shrek very well at $60 million -- half of that of Cars and 50% lower than the $90 million budget for Stuart Little. Thus, Eric wasn't too worried about Shrek's profitability.

Even with an opening week's revenue of $56.49 million, hitting the $100 million mark at the North American box office seemed inevitable. Adding overseas earnings and merchandise revenue, Shrek was destined to generate significant profits, prompting Blue Sky Studios to consider a sequel right after the first week's earnings come in.

However, unforeseen developments soon unfolded.

In the second week of release, perhaps due to further word-of-mouth buzz, Shrek's box office figures surprisingly soared, ultimately reaching $63.65 million.

In just two weeks, Shrek's total box office crossed $120 million, directly recouping its production costs.

Following this unexpected box office turnaround, Shrek's ultimate earnings wouldn't just stop at two hundred million. According to Fox's distribution department's analysis, as long as the subsequent box office curve remained strong, the film would comfortably break through $250 million, and it might even aim for the $300 million mark.

A 3D animated film with a production cost of only $60 million suddenly revealed its potential as a box office bombshell, sparking considerable discussion once again within Hollywood.

Furthermore, Blue Sky Studios' approach of controlling costs for both Ice Age and Shrek became a focal point of study in Tinseltown. After all, one of the greatest challenges faced by animated films is managing excessive production investments.

Throughout the summer season, despite the box office misfortunes of Stuart Little, which had cost $90 million to produce, Hollywood once again ramped up its attention and investments in 3D animated films, thanks to Cars and Shrek.

*****

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