Chapter 1113: VideoLogic
June 1997
"Neither Sega nor NEC is opposed. Ishihara has it in writing from the Katana side, and NEC's people in Kawasaki have already asked for a customized part number."
Alex had the wheelchair pulled up square to the study desk and both hands flat on the blanket over his knees. "So?"
"So VideoLogic's better than even odds to lose the order. Sixty, sixty-five percent."
"Based on what?"
Dr. Chen had the folder open on the desk. Beside him sat Dr. Mei, who looked like a man who'd been yelled at from both ends for six months, and he had been. He hadn't set foot in the 3dfx building since April. In May a photographer had camped in his hedge, and his wife had stopped answering her own phone.
"Fill rate. Developer support. They've got nothing like Glide," Dr. Chen said.
Glide was 3dfx's own programming interface, the set of commands a game developer wrote to so his game would talk straight to the Voodoo chip. Half the good PC games that year had been written for Glide first. Fill rate was how many pixels a chip could paint a second, and it was the number the magazines printed in the big type.
VideoLogic was a company out of Hertfordshire, England. Two hundred people, a very proper British chairman, and a tile-based chip architecture its engineers believed in with their whole hearts. None of that was worth much by itself. What it had that mattered was NEC, a Japanese manufacturer willing to put its name on the chips.
The chip was called PowerVR. Tile-based meant it chopped the screen into little squares and finished each one before moving on, instead of painting the whole frame over and over in layers. It saved memory and it was clever, and games written for Voodoo mostly ran badly on it.
"Which makes VideoLogic a bargain," Dr. Mei said. "Small, beaten down since the spring. Forty million at today's price, real patents, and an NEC relationship that survives even if Sega goes with us."
The company had been listed in London since 1994 and had lost a third of its price since March.
"Ross has a file on them?" Alex asked.
"Since March. If we bought them—"
"No."
Both men stopped.
"We're not buying VideoLogic. Ross only wants it because it's the competitor he can see."
Dr. Mei had run the numbers three different ways on the flight out, and they were on page two. "But it's only forty million."
"Forty million so Ross can own the other guy's problems too? No. Fuck VideoLogic," Alex said, and then, because Mei looked hurt, "Your math's fine, Doctor. I just don't want it."
"Nvidia," Dr. Chen said, very quietly.
A little California company, a couple hundred people, and one new chip, the RIVA 128, just going into production. It had nearly gone under on its first chip. If the second one worked, the company he was chairman of had a problem, and he'd rather own a piece of the problem than read about it.
"We're already in, right?" he said.
"As of Tuesday. Four million into the Series C alongside Sequoia, through the Delaware vehicle."
A Series C was a company's third round of venture money, after the founders' first money and a second round. Sequoia Capital, on Sand Hill Road, had been in Nvidia since the start in 1993. It had backed Apple, Oracle and Cisco before that, and when Sequoia put more money in, the rest of the Valley paid attention. Dr. Chen closed the folder. "Nobody at 3dfx knows, it isn't in any board paper, and I'd like to keep my job, thank you."
Dr. Mei looked from one of them to the other. "You're hedging against your own company?"
"I'm hedging against three guys who stuck a confidential agreement in a prospectus." Alex turned the chair toward him. "Dr. Mei. Chen tells me you want to go home, and you want to take money with you."
"Yan Hong wants to go home. My wife. She says if she has to see one more photographer in her hedge she'll set it on fire." Mei rubbed his face. "And yes. Venture money, for internet business over there. I know how it sounds." Mei sat forward, and for the first time that afternoon he looked like a man with something to say. "But there are maybe a million people online in the whole country, Mr. APLUS. Most of them in university buildings."
"And nobody making a cent off it," Dr. Chen said.
China had only been properly hooked up to the internet since 1994. The state phone company had started selling dial-up accounts to the public the year after, at prices most families couldn't dream of, and the government ran every line that went out of the country through a few gateways it controlled. Dr. Chen had looked at exactly two Chinese proposals in three years for A+ Ventures and passed on both inside a week.
Yan Hong had been saying it for a year: the thing was starting over there, and starting badly, on borrowed modems and university lines. Every time Mei repeated it to an American investor, the man changed the subject or asked him about the exchange rate on the yuan.
A billion people and a government that wanted phones and computers in every city. Most of whatever he put in over there would go to zero. Ten million spread across a dozen kids in back rooms was money he could lose, and hardly anybody in America was looking.
"Go to Shenzhen. Hangzhou. Beijing," Alex said, and had to stop and get his breath. "Anybody copying something that already works over here. Kids in a back room with no money. Those are the ones."
Dr. Mei stared at him. He'd come up to Highland Park expecting to take the blame for a prospectus, and instead he was being handed a country. "How much?"
"Ten million to start. Two here, two there. Small pieces."
Mei was already doing the math on schools for his kids, and on a flight home his wife wouldn't have to be photographed getting off. "And I run them?"
"No. You sit in the corner and write checks, and you don't tell anybody whose money it is. You pick the kids, the kids run it. You get two percent of whatever it's worth when we sell, so pick well." Alex looked at Dr. Chen. "Korea too. Open an account in Hong Kong that can buy Samsung Electronics shares. Don't buy anything yet. Just have it ready."
Samsung was Korea's biggest chaebol, the family conglomerates that ran the country's economy, and Samsung Electronics had been the biggest memory-chip maker in the world since the early nineties. With Default, the Korean film, sitting in his head, he knew the shares weren't going to be this expensive by winter, and he wanted the door open before then.
"An account with nothing in it. You love to make my life interesting." Dr. Chen rubbed his eyes. "Anything else in Korea?"
"Not in Korea. There's a games company in Irvine I want you to look at. Blizzard. They made Warcraft II, and Diablo's been in the top ten since New Year's. CUC International owns them now. Get me a report."
"And VideoLogic?" Dr. Mei asked, faintly.
"Let Ross pick a fight with them in the press. It'll keep him busy."
"Ten million for China, four for Nvidia, an empty account for Korea, and a games company in Irvine. You know what my investment committee is going to say?"
"You don't have an investment committee."
"Exactly. That's what I'll tell them." Dr. Chen had run A+ Ventures for three years, and in all that time Alex had given him exactly one thesis, sell them jeans, and after that only city names and dollar amounts. He'd stopped complaining about it after the first year, because the city names kept making money.
When the two doctors had gone, Sloane came in from the hall, shut the door, and leaned back against it. "Ten million dollars to China, from a man who can't hold a phone. I was listening at the door, before you ask."
Alex had the two-pound therapy weight in his lap and didn't put it down for her. "Don't start."
"I'm not starting. I'm admiring. Dr. Chen walked out of here looking like you'd handed him a baby."
"Relax. It's Chinese websites in 1997. Ten million dollars. Nobody cares."
"I care. I'm the one who has to wire it." She came over and sat on the arm of his chair, which she'd never have done in front of the staff. "Also. Halle's still in the guest room."
The vacuum cleaner upstairs had been going back and forth over the same six feet of carpet for a while. "She's in the picture. She's helping with the publicity."
"From the guest room. For three days. Very hard-working girl." Sloane picked at a thread on his sleeve. "Sherilyn's been cornering me in the laundry room asking whether you're— whether you're well enough to have a houseguest down the hall. She used the word 'recovered.' She waits until there's a machine running so nobody hears."
"Tell her the therapist says Friday."
"Friday for a hallway? That's your answer to the mother of your two-week-old daughter?" She shook her head. "No. Uh-uh. I'm not getting cornered next to the dryer again for you, APLUS. You talk to her yourself, tonight, or I'm sending her in here with the baby and you can explain Halle to Sansa."
"You're mean."
"I'm tired, and she folds towels at me. You have no idea what that's like." She stood up. "And tell her about VideoLogic, too. Otherwise she'll hear it from the staff and get mad you didn't tell her. Anything else, your majesty?"
Alex looked at her properly. The suit was the same one she'd worn to Tokyo, and it hung looser at the waist than it had then. She'd been living on coffee and fax paper since January.
"You've lost weight lately." He reached out, without warning, and caught a strand of her blonde hair between two fingers.
Sloane frowned, leaned back, and studied his face.
"Hey." He wound the strand around his index finger, pleased with himself. The fingers were working. A month ago he couldn't have done it.
Sloane raised a hand and pushed his away, and he took the chance to brush the back of her hand, and then her forearm.
"You—" Her expression went complicated.
"Hey." Alex grinned. "I've been doing rehab and exercise for three weeks now. Look. Full range of motion."
"Your therapist said hallway, not my hair."
"The hallway's boring."
"Hh! Unbelievable." She stepped out of reach and tucked the strand back behind her ear, and her ears had gone a little pink. "Eat something. You look worse than I do."
"You just said you're the one who's lost weight."
"I didn't say it. You said it." She opened the door, went out, and left it open, which meant the conversation wasn't finished as far as she was concerned.
Alex grinned at the empty doorway for a while. Then he lifted the weight with the right arm until it shook, a few more than he'd managed on Sunday, and sat with it in his lap with his eyes shut. The house went on around him. The vacuum upstairs, Tony's car on the gravel, a baby crying, and a woman laughing in the kitchen two rooms away at something he couldn't hear.
Ten at night on Fifth Avenue.
That morning Carl Icahn had walked into a boardroom on Third Avenue and walked out chairman of Marvel Entertainment. It had taken him two years and a bankruptcy court, and it had cost Ron Perelman a fortune and a lot of face.
Perelman had bought Marvel in 1989 for about eighty million dollars, taken it public, and borrowed against it again and again to buy trading-card companies, a sticker company and a distributor. Then the comics market collapsed. The speculators who'd bought five copies of every foil cover stopped buying, and comic shops closed by the thousand. In December Marvel had filed for Chapter 11 bankruptcy protection. Icahn had bought up Marvel's bonds cheap and spent the months since fighting Perelman in court for control, and the court had let the bondholders take the board.
He'd been doing it to airlines and steel mills for twenty years. Calling a twenty-two-year-old at ten at night to give him advice for free was new, though.
He had the phone against his ear and his feet on the desk, and he'd had a few. "—Blair took office last month. Labour. First thing he does is get up at a dinner and talk about British semiconductor champions. Then the member for Hertfordshire goes to the papers worrying about your little card company. Same afternoon. Did you notice?"
Tony Blair had won the British election on the first of May in a landslide, the first Labour government since 1979, and at forty-three he was the youngest prime minister in nearly two hundred years. His party called itself New Labour and talked about technology every chance it got.
"No."
"No. You see, boy, that's the problem. You play finance like a musician. You put the news out and you stare at the tape—"
In Highland Park it was ten o'clock too, and the study lamp was the one light still on at that end of the house. Alex sat behind the desk with a headset clamped on his skull. He could hold a handset for about ninety seconds now, and Icahn had been going for a lot longer than that. Sloane sat in the other chair with her shoes off and her feet tucked under her, listening on the extension with her hand over the mouthpiece and making faces at him.
"—and don't bury your head in the technology, either. Learn the press. Learn the regulators—"
"Ha. You sound very pleased with yourself, Mr. Icahn."
"I admire you. Wow. You wake up, you don't cry about your empty accounts, you get on a plane to Tokyo with six holes in you." A swallow, loud on the line. "But you know what? The harder you swim, the sorrier I feel for you."
Sloane mimed a man drinking from a bottle. "Go on. I'm listening," Alex said.
"You're going to work yourself to death and end up exactly where you started, kid."
Alex let the line go quiet for a second. "Wow. Did you lose too much money today? You called me at ten o'clock to tell me that?"
"I called to teach you a little Wall Street for free, boy. Ha."
"Then give me my money back first. Is that the whole lesson? It's ten o'clock here."
"Ha. The lesson's free. I'm in a good mood. As of this morning, I'm chairman of Marvel."
"Congratulations," Alex said flatly.
"They're all very excited in there about your picture. The one you paid for. Marvel needs you to keep opening the market for my—"
"Hold on. Your Marvel? Since this morning? You bought the bonds for nothing out of a bankruptcy and now my vampire works for you?"
"That's how it works, boy. Ha!"
"Mr. Icahn. Since you're in a teaching mood." Alex shifted the headset with the back of his hand. "A week ago your people called and asked what I wanted to call it quits on 3dfx. Remember what I said?"
"You said—" the gravel went amused "—your blood to run dry. Good line, for a singer."
"It wasn't a line, you drunk old bastard. Mine ran dry in January. Seven hours on the table, and bags and bags of somebody else's. You want to lecture me about drowning, go lecture the guy who shot me."
The gravelly voice at the New York end went quiet for about a second. "Well, that's hardly the same thing."
"Yeah? You lost some money on a short, I lost five months, and you're the one calling me at ten at night half in the bag. Give me my money back, Carl."
Nothing from New York.
"Goodnight," Alex said, and hung up.
Sloane put the extension down. "You just hung up on Carl Icahn. You. From a wheelchair."
"He was done anyway." He pulled off the headset and dropped it on the desk. "He's chairman of Marvel now. Good. Now he's got something to lose." He rubbed his eyes. "What does a man like that want with a graphics card company?"
"Money. And to win. You know he gave that exact drowning speech to Perelman on CNBC in March? Same ocean, same mirage. He's got one speech and he uses it on everybody."
"Then maybe I should call Perelman."
Sloane snorted and threw her shoe at his foot. "You would. You would, too."
Three days later, in the study.
"Get me Ron Perelman."
Sloane was in the other chair with the Musical America filings, a stack of them as thick as a phone book, and kept her pen moving down a column of numbers. "Perelman? Seriously? The man sued his own stepson."
"Revlon Perelman. He's lost the board and the chairmanship, and he's sitting on paper he can't sell."
Perelman had bought a comic book company, listed it, borrowed against it twice, and then watched a man he'd underestimated take it away from him in a courtroom. He wasn't poor and he wasn't finished. But that month he was the most available rich man in New York. Sloane had been watching the Marvel fight for two years.
"And a grudge against Icahn the size of Fifth Avenue," she said.
"He wants an ally more than he wants money right now. Buy some of the claims alongside him. Bonds, equity. Marvel's bonds are trading around twenty cents on the dollar. Twenty-two million buys about a hundred million of face, and that's a vote nobody in that courtroom can ignore." Alex got his breath. "And put my name next to his when the plans go in front of the judge."
A company in Chapter 11 didn't have a proxy fight. Whoever wanted it filed a reorganization plan with the bankruptcy court in Delaware, and the creditors voted on the plans class by class, the banks in one class and the bondholders in another. Icahn had the bondholders' seats on the board this month. Toy Biz and the banks had their own plan. Perelman's shares came last in line and were worth almost nothing on their own, but he knew every document in the case, and whoever bought enough of the bonds got a vote that counted. It was slow and public and full of lawyers billing by the hour.
"Twenty-two million. You've already got sixty sitting in Fox's boat."
"And McGill just sent thirty-eight back. And I've got sixty million of Netscape I'm not selling, and Northern Trust will lend against it."
"Which you've already spent twice. Once on Fox and once on Perelman. And Northern Trust charges you nine and a quarter to lend against it, I asked. Fine. Fine!"
"Call his office. Use the word 'alliance.'"
"And if it leaks?"
He had his arm stretched across the desk and couldn't get it back to the blanket without help. Sloane got up and moved it for him. "Let it leak."
Sloane looked at him for a long moment. She'd been in the room in Tokyo for the bow, and had gone down to ninety degrees herself with her jaw set. She'd spent the two weeks since being asked by serious men on the phone whether the chairman was well.
"Alliance. With Ron Perelman. Against Carl Icahn. Three weeks out of a coma." She got up. "God, I love this job."
"Oh, and Sloane. Make it loud."
She stopped at the door. "Hh. You're enjoying this."
"A little. Aren't you?"
"More than you, and I've got legs." She blew him a kiss off her palm, rolling her eyes at herself while she did it, and went out.
A second call came a day later, sober, and it wasn't Icahn.
"Mr. APLUS. Thank you for taking this. I'm calling on Mr. Icahn's behalf. He sends his regards. He's traveling."
Alex had the headset on again and Sloane was on the extension. "Go ahead."
"Everyone here admires the recovery. Truly. I'll be direct. The last two weeks around 3dfx have been costly on our side."
It was a smooth, careful voice, the kind of lawyer's voice that never said anything you could quote in court. Alex had read the damage on Tuesday, in bed, with Muffler holding the paper open for him: the Journal put Icahn's loss on the 3dfx short at about thirty million dollars in one afternoon. "Yeah, I read the numbers."
"They're not far off." A small pause, so Alex could take it as a compliment. "Mr. Icahn doesn't hold grudges over a trade. The door is open."
"But?"
The man on the other end had been Icahn's partner for nine years and had made plenty of calls like this. He'd been told to work round to Musical America slowly, and he hadn't expected to get to it this fast.
"There's a view on our desk that the Tokyo settlement came with no disclosure to a significant short-side holder. And that your bank's buying was, let's say, enthusiastic."
"Meaning what?"
"Meaning there might be some conversation about compensation."
"Ha. So he wants to get paid."
"Some accommodation. The Musical America financing, for instance. Our funds hold paper on that site, and there's a refinancing due in the spring. Some flexibility on terms, in exchange for—"
"Tell Carl I've already compensated him."
A pause. "I'm sorry?"
"He's chairman of Marvel, and it got four inches in the Journal. My Blade made Marvel characters worth something at the box office again, and Marvel's bonds went up two points the Monday after it opened. Those are his bonds. You're welcome."
"That isn't—"
"And when I want to talk about Musical America, I'll call Ron."
"Mr. APLUS—"
"Thanks for calling," Alex said, and hung up first. Again.
Sloane put the extension down very gently. "That's twice this week. He's going to put out a contract on you."
"Somebody already tried that. Didn't take."
"Not funny." But she was laughing, and she came round the desk and pushed his hair back off his forehead like she had in the hospital. "I'll call Perelman's office in the morning. Loud."