Chapter 106: Big Bargain

"The stocks of three portal websites: NetEase, Sina and Sohu!" Liu Zhou said firmly.

A year and a half ago, these three domestic portals were listed on NASDAQ one after another, officially starting the Internet’s wealth-making myth.

As glorious as they were in the past, they are in a miserable state now.

A global Internet bubble caused Internet companies all over the world to wail.

The three domestic portals were also not spared, with their share prices falling from more than ten dollars to less than one dollar.

Among them, NetEase Games suffered the most, with its market value falling from its peak of US$97 million to less than US$ million, a drop of %, and it was almost suspended.

To make matters worse, rumors broke out that NetEase was suspected of financial fraud. Investors came to demand repayment one after another. Ding Lei, who became famous at a young age, could not withstand the tremendous pressure and even considered selling NetEase and starting a new business.

Later, Xu Xin of Today Capital, who was also an investor of NetEase, introduced Duan Yongping to Ding Lei, invested one million US dollars and acquired 5% of the shares, which stabilized the investors' hearts.

The reason why Duan Yongping has such a great influence is that he is a hidden behind-the-scenes boss in the mainland business community.

From Xiaobawang to BBK, he created one brilliant achievement after another.

Later, he decided to adopt a multi-brand strategy and subsequently split BBK into three companies: BBK, OPPO and vivo.

However, he later retired from the limelight and lived behind the scenes, leaving all these companies to be managed by his subordinates.

Huang Zheng, who later founded Pinxixi, also received investment and support from Duan Yongping.

Although he seldom appears in public, no one dares to ignore his influence.

So Duan Yongping calmed down the investors of NetEase with just one move.

Later, as NetEase's stock price continued to rise, his investment became a legend in the investment community.

Liu Zhou knew that even though NetEase’s stock price was still sluggish, they were already planning a big move internally.

With the emergence of the online game Westward Journey Online and the subsequent popularity of Fantasy Westward Journey, NetEase's stock price was the first to recover among the three portals, and in the end it also had the highest market value.

Ding Lei even once became the richest man in China.

Therefore, Liu Zhou’s investment focus this time is also on Wangyi.

Currently, the share price of NetEase Cloud Music is only US$0.75. Liu Zhou directly took out US$ million and acquired % of the shares.

NetEase's total share capital is more than 30 million shares. Although its stock circulation is very low now, such a large-scale buying spree will inevitably cause its stock price to rise.

Liu Zhou used US$0.9 million to acquire million shares of NetEase stock at an average price of US$.

It’s not that Liu Zhou couldn’t buy more, but he didn’t want to cause Ding Lei’s misunderstanding.

He is a person with a strong desire for control. Among many Internet tycoons, he has the strongest control over the company.

Not only because he is the founder, but also because he holds more than four layers of shares in NetEase, which is very rare among many Internet companies.

Penguin Ma and Jack Ma both hold single-digit shares in the company and control the company through a series of operations.

Liu Zhou didn't intend to usurp the company's position; it was merely a financial investment. Besides, 12.4% of the shares was not a small amount, so there was no need to cause misunderstandings.

At the same time, in addition to purchasing NetEase shares, Liu Zhou spent another 2.3 million US dollars to acquire 8.7% of Sina's shares. Sina's stock price is lower than NetEase's, but the total share capital is larger.

In the end, Liu Zhou spent 1.2 million US dollars to acquire 5% of Sohu's shares, just reaching the threshold for taking the lead.

Zhoushan Capital's blatant operation unsurprisingly attracted the attention of the founders and boards of directors of these three companies.

They sent letters to express their regards, but in fact they just wanted to understand the situation.

Liu Zhou did not hide anything and immediately asked Zhong Lifang to publicly hold shares in these three companies on the first trading day of the new week. At the same time, he stated that this was a financial investment and would not interfere with the operations of the board of directors and management.

The industry was very curious about the fact that this investment company that suddenly emerged had the guts to invest in the stocks of an Internet company that had fallen to worthless paper.

Although the Internet industry is currently in a recession, its popularity remains high, so Zhoushan Capital's sudden stake acquisition has also attracted a lot of coverage from financial media.

However, neither Liu nor Zhou showed up, and everything was handled by Zhong Lifang in front of the stage.

Ordinary people may not know who the boss of Zhoushan Capital is, but for those bigwigs, this is no secret.

As a result, Liu Zhou received invitations from these three portal websites one after another, asking him to visit their companies.

Liu Zhou smiled and promised to come over when he had time, then said a few simple greetings and hung up the phone.

Although Liu Zhou didn't intend to keep it secret, he was still a little amazed at the ability of these people as they were able to find him so quickly.

By the time these investments were completed, it was already late April.

At this time, Zhong Lifang asked Liu Zhou:

"Mr. Liu, we have invested 7 million US dollars in these three companies. We still have 13 million US dollars left in the account. Do we need to invest it?"

Although she didn't know why Liu Zhou was so optimistic about Internet companies, she also felt that the Internet would be an emerging industry in the future, so she didn't say much about Liu Zhou's arrangements and just did her job conscientiously.

"Of course, keep $3 million in the account first, and invest the remaining $10 million."

“Which stock to invest in?”

“Amazon!”

Amazon is a company that is different from the three domestic portals in that it is much larger in size.

Although Amazon's market value was also halved due to the Internet bubble, it is still worth more than ten billion US dollars.

And with the active self-rescue efforts of Amazon President Bezos, Amazon's stock price has begun to recover.

It has risen from less than one dollar per share to over two dollars now.

Moreover, from the beginning of the next year to 2003, Amazon's stock began to soar, steadily entering the club with a market value of 200 to 300 billion US dollars from a few billion US dollars.

Then, starting in 2008, Amazon's market value began to soar again, until it became a behemoth with a market value of one trillion US dollars.

Liu Zhou used the remaining $10 million to buy Amazon stock, but his stake was less than 1%.

Liu Zhou originally wanted to use leverage, but then he realized that he had no backup funds. Amazon is so large that if its stock price fluctuates, he might lose all his money.

So Liu Zhou overcame his greed, did not use any leverage, and directly used his own funds to buy stocks.

Even with less than one percent of the shares, its value will exceed $100 million in two years, which is enough for me to do a lot of things.

After dealing with all these things, Liu Zhou did not return to the capital, but came to Pengcheng, which is across the sea from Hong Kong.

Of course, the reason I came to Pengcheng was to invest the remaining three million US dollars.

SEG Technology Park is where Penguin's first office was located. It is said that this was a dance studio that Xiao Ma borrowed from a friend and converted into an office.

When Liu Zhou came here, he felt that this place was actually not bad. After all, it was a formal office location. When Jack Ma first started to conquer the world with the Eighteen Arhats, his office was squeezed in his own residential building.

In Penguin's conference room, Liu Zhou met Pony Ma and the other four founders.

Xiao Ma Ge was born in 71, seven years older than Liu Zhou. He looked no different from people in later generations, and was well-mannered.

But maybe it’s because I was too worried during this period, and the dark circles under my eyes can’t be concealed.

"You must be Mr. Liu from Zhoushan Capital. I have heard of you for a long time. You are the pride of us in East Guangdong."

Some time ago, Liu Zhou asked Zhong Lifang to contact Penguin and agreed on a time to visit.

Of course, Pony Ma, who is currently in a state of panic, is very welcoming to this investment institution that suddenly emerged and made huge investments in Internet companies.

However, out of instinct, Xiao Ma Ge still investigated Zhoushan Capital, and also discovered that the boss behind this company is the most popular best-selling author and famous director in the country.

This discovery surprised Xiao Ma Ge a little. He didn't know that Liu Zhou, who was in the literary and art circle, had crossed over to the Internet industry.

But Xiao Ma Ge didn’t think too much about it. As long as you have money to invest in your company, it doesn’t matter what industry you are in.

Although Penguin is not listed, its performance is even worse than the three listed portals.

At least they can maintain basic operations and even invest in new projects, but Penguin has problems with even the most basic operations.

Although the Internet industry is in a terrible state, this is speaking at the capital level. The influence of these Internet companies is growing.

The Internet bubble did not affect the rapid growth of Penguin users at all, and now they are almost out of money to rent servers.

But now there is no way to raise money, and even existing investors are clamoring to sell their Penguin shares.

Now suddenly a big player appears and seems to be interested in his own software, so he has to greet him with a smile and even play the card of his fellow townsman.

Although one is from Chaoshan and the other is from Yangcheng, they are both from the same eastern Guangdong province, so there is nothing wrong with saying they are from the same hometown.

"Mr. Ma, you are too kind. I am not proud at all." Liu Zhou replied with a smile.

Both parties were well aware of each other's intentions. After exchanging pleasantries for a while, Xiao Ma took out a document and handed it to Liu Zhou.

"Mr. Liu, here are some data and operating conditions of our Penguin Company, as well as the subsequent plans. You can learn about them first."

Liu Zhou didn't care about it and handed the document to Zhong Lifang beside him.

“Mr. Ma, these data are very vague. I don’t take them seriously. The reason I came here this time is because I am optimistic about your software.

But I still want to ask a question, have you found a way to make a profit now? "

Hearing Liu Zhou's words, Xiao Ma Ge's face was a little embarrassed and he said:
"Mr. Liu, although QQ has not yet found a way to make money, we have a lot of users. Users are wealth. Instant messaging is essential for people to communicate in the future. Making money is a matter of sooner or later."

Penguin’s biggest weakness right now is profitability.

Last year, Penguin ran out of money due to its rapid user growth.

But at that time they had no financing channels at all. They asked several middlemen for help, but they didn't get any positive feedback.

Then the famous meme was born, Xiao Ma Ge was preparing to sell QQ for two million yuan.

Although I don’t know whether this is true or not, it is true that Xiao Ma Ge was very short of money at that time.

Finally, through his father's connections, he brought in Hong Kong Little Superman and IDG to invest two million US dollars in Penguin Company, but took away 40% of the shares, 20% each.

But soon after the investment, Little Superman and IDG regretted their decision. Penguin had many users, but they simply could not find a way to make a profit and had to keep operating at a loss.

After the Internet bubble burst, these two investors tried their best to sell Penguin shares, but no one was interested.

If Liu Zhou didn't take action, someone with a discerning eye would have seen the value of the penguin.

This person is Wang Dawei, vice president of the China Business Department of MIH South Africa, a subsidiary of the South African Newspaper Group.

He is a handsome Chinese who speaks very good Chinese, and he strongly recommended Penguin to the South African headquarters.

In the end, South Africa's MIH company not only provided financing to Penguin, but also acquired all of Penguin's shares held by Little Superman and IDG.

Before the listing, MIH held 46.5% of Penguin shares, and even after the listing, the shareholding exceeded four levels.

This is also the most criticized aspect of Penguin Entertainment by the Chinese people in later generations, even though the control of the company is still in the hands of Pony Ma.

Now Liu Zhou is helping him with the financing work.

Liu Zhou is now powerless to do anything about the shares held by Little Superman and IDG. If he misses this opportunity, I think MIH will make a move in a few months.

As for why Liu Zhou didn't put all his money into Penguin shares, it was because the value of so many stocks in the future would be too huge and he was worried that he would not be able to grasp it.

Secondly, Liu Zhou was also worried that after having so much wealth, he would lose the motivation to strive for success.

It's pretty good now. Penguin will take some shares through financing, and they will be diluted a little when it goes public. The remaining shares will be enough to ensure that Liu Zhou will have no worries about food and clothing for the rest of his life, and he can even make it into the rich list without any problem.

You know, Penguin’s market value at its peak was close to one trillion US dollars, and one point of shares was worth tens of billions.

Therefore, Liu Zhou didn't care about Xiao Ma Ge's weak words at this time. After Zhong Lifang finished reading the documents, he started to discuss financing matters.

A year ago, when Li Chaoren and IDG invested, Penguin's valuation was only 5.5 million US dollars.

Now a year has passed, and Penguin's users have more than doubled. Although the Internet bubble has not yet passed, its valuation cannot be lower than this.

Even if Xiao Ma Ge agrees, Little Superman and IDG will not agree.

Finally, after brief discussions, the two parties reached a preliminary agreement with a valuation of 18 million.

However, after informing the two investors of the financing news, they disagreed and insisted on a valuation of 30 million, resulting in a stalemate for a while.

What Liu Zhou didn't expect was that both IDG and Li Chaoren contacted him secretly and said that the price could be negotiated if Liu Zhou could buy their shares.

Of course Liu Zhou decisively refused this, as doing so would seriously offend Xiao Ma Ge.

What the Penguin lacks now is money, and we have already negotiated with him before. If you turn around and make a deal with them now, it would be strange if Xiao Ma Ge doesn't slowly clean you out in the future.

Don't be fooled by Brother Xiao Ma's gentle appearance, he can be very ruthless when he takes action.

Seeing that Liu Zhou was unmoved, the two parties began to seriously discuss financing with Liu Zhou.

Although the valuation of 30 million US dollars was a bit too high, they also felt that 18 million US dollars was too low.

In the end, both parties took a step back and reached an agreement with a total valuation of US$24 million.

(End of this chapter)