Jogging step for step beside Simon, Larry Ellison picked up on what Simon had just said. "Simon, since you're bullish on Oracle, why not do what Microsoft did and hand the voting rights for Westeros Company's shares over to me?"
Simon replied bluntly, "Larry, being bullish on Oracle doesn't mean I'm bullish on you. If Oracle's stock keeps falling, I think it might be necessary to replace the person in charge."
Larry Ellison had tried to climb up the pole, only to realize he'd dug a hole for himself. He gave an awkward laugh. "Simon, you're joking, right?"
They rounded another bend together. Simon's hilltop estate was just ahead.
Simon had no intention of inviting Ellison to breakfast. He stopped jogging and said, "Larry, now that Westeros Company has started buying in, that should be a major positive for Oracle. And from the first time Westeros bought Oracle a few years ago until now, I've never interfered in Oracle's operations. You should understand my attitude. Since you showed up here today and you're starting to worry about your control of Oracle, tell me. What exactly happened at Oracle?"
Larry Ellison hadn't expected Simon to hit the mark so cleanly. For a moment he didn't know how to respond.
Seeing him stay silent, Simon asked more directly. "The third quarter report comes out next month. How big is the loss?"
"About... thirty million," Larry Ellison hesitated, then gave a vague number. He immediately added, "Simon, it's temporary. This quarter Oracle's revenue can break two hundred million, up twenty six percent quarter on quarter. At this pace, Oracle's revenue this fiscal year can exceed one billion."
Simon didn't listen to the rest of Ellison's defense. He couldn't help confirming, "One quarter, a thirty million loss?"
Oracle's revenue had doubled year after year in recent years. This year it had begun expanding into Latin America and Europe. Its growth rate was extremely strong, which was why its market cap had surged to 3.6 billion last year.
But Oracle's net profit for all of last year had only been a little over forty one million. Now it was losing thirty million in a single quarter. Without any major investment or M and A projects, a sudden loss this large could only mean Oracle had a very serious internal problem.
Even though Simon didn't interfere in Oracle's operations, he wasn't ignorant about the company.
Since the first half of this year, the media had repeatedly questioned whether Oracle's financials were inflated. Oracle's profits in the first two quarters had shrunk, triggering a continuing stock decline. He hadn't expected that in the third quarter, it would suddenly post a massive thirty million loss.
Under Simon's sharp gaze, Larry Ellison could only nod again.
Simon stopped entirely and asked, "So?"
Larry Ellison understood what Simon meant and didn't hide it anymore. "Simon, it was a strategic mistake. Some salespeople, to get bigger bonuses, counted customers who had only signed letters of intent to purchase software as if they were finalized sales. Later those customers didn't end up using Oracle's software. I've been dealing with this for the past few months..."
Larry Ellison didn't continue, but Simon understood.
And he still hadn't finished cleaning it up.
The new quarter report was about to come out. A serious sales strategy failure, inflated revenue numbers, and a thirty million loss were enough for furious shareholders to throw Larry Ellison out. Ellison had shown up here to intercept Simon because he wanted Simon to publicly back him.
Leaving aside Simon's personal prestige after creating a wealth miracle in just a few years, Westeros Company's fifteen percent stake in Oracle, plus Ellison's own thirty three percent, was basically enough to guarantee absolute control over Oracle.
Early tech companies like Apple, Microsoft, and Oracle didn't have dual class share structures that guaranteed founders control.
If Simon joined other shareholders in trying to oust Ellison, then even as Oracle's largest shareholder with thirty three percent, Ellison would still likely have to pack his bags and go. Jobs had been driven out of Apple the same way.
After thinking for a moment, Simon said, "Contact Jim. Write me a report with the full details and the follow up plan."
Ellison didn't want to take another loop through James Rebould. "Simon, how about we grab breakfast together? My car's right over there. Or you can come to Oracle headquarters this morning and we can talk it through."
"Skip breakfast," Simon said. "And I'm flying to New York right away." He refused, and though he had no real intention of replacing Larry Ellison, he didn't want to seem too easy to sway. "That's it for now. Go back and contact Jim as soon as possible. I don't want Oracle hiding anything from us major shareholders again."
With that, he ignored Ellison and walked toward the gate of his hilltop estate.
After breakfast, as he left Woodside and his private plane took off, Simon called James Rebould to discuss Oracle.
James had been watching Oracle's situation as well. If Oracle weren't one of the companies Westeros had promised not to reduce its holdings in for three years, James would already be urging Simon to sell Oracle, not keep buying.
Oracle's problems were likely far worse than Ellison had described. Overexpansion had tightened cash flow, the collapsing stock price made financing difficult, and they might even face a class action lawsuit over inflated performance numbers. If Oracle couldn't clear this hurdle, even if it didn't go bankrupt, it might never recover.
With the arrival of the internet era, demand for database software would surge. Simon wasn't as pessimistic as James. He only instructed Westeros Company to keep increasing its Oracle stake while the stock remained depressed, until they reached twenty percent.
Even if he didn't know whether Oracle had suffered a crisis like this in the original timeline, even if the entire investment went to zero, Simon could afford it now.
The flight between coasts was four hours.
After ending the call with James, Simon sat by the window in the forward lounge and opened his laptop, starting to test the Dune video game Nancy had given him a few days earlier.
He didn't know how much time passed before a faint fragrance drifted through the air. Simon looked up to see the A girl, Allison Norris, standing beside him. She'd changed into a sky blue flight attendant uniform, making her look even more slender and graceful. With her hair pinned up, her delicate neck looked pale and long.
He had to admit, the four ornamental "vases" Janet had picked out were all at least an eighty out of a hundred.
When Simon looked up, Allison finally spoke. "Boss, I wanted to ask if you'd like some lunch on the plane?"
As she said it, she couldn't help glancing at the video game on Simon's screen. A faint sense of frustration rose in her. Was she and Becky really less attractive than a video game?
Simon checked his watch. It was eleven in the morning, West Coast time. On the East Coast it was already two in the afternoon. Even once he arrived in New York, he could only wait and have dinner with Janet, so he said, "Just prepare something. I'll go to the dining area in a bit."
Allison nodded, but didn't leave immediately. She went down the spiral staircase to the lower wardrobe room, opened the safe inside, selected a box of wristwatches, then returned to the lounge and bent slightly to offer it to Simon. "Boss, would you like to change your watch? These are all set to East Coast time."
Bending toward him, she was directly in front of Simon. With one button undone, the neckline revealed a tempting swath of pale skin.
With the distance between them closing, the sweet scent of her body grew stronger too.
Simon picked a silver Rolex, removed his Patek Philippe, handed it to Allison, and smiled. "All right. Go prepare lunch. Stop trying to seduce me here."
Caught out, Allison's cheeks flushed, but her gaze became even bolder. She stood there as if offering herself up.
Only when Simon turned his attention back to the laptop screen, clearly not planning to indulge her, did Allison have to give up. She returned the watch box, worth more than a million dollars in total, back into the safe, then left the forward cabin to prepare lunch.
With a beauty right in front of him, Simon wasn't unmoved. He simply had self control.
And at Simon's current status, because everything was too easy to get, women truly didn't hold any special allure for him anymore.
Take Hollywood. There were plenty of lechers, but as far as Simon knew, the top tier studio bosses were often the least interested in women.
In private conversation, Robert Redford had once told him a joke. In the early 1980s, a certain studio head got the urge to throw a swimsuit party.
A studio boss's party could draw far more ambitious men and women than any Hollywood star gathering.
When the mansion pool filled with sizzling bikini girls, the boss received an important script at the last minute. He got absorbed, sinking deeper and deeper. When he finished and realized it was late, he casually told the butler to end the party, then picked up the phone to keep talking with the writer about revisions, never once truly paying attention to the sensual spectacle in the pool. [TL/N: Damn him.]
By the time they reached New York, it was already Thursday afternoon.
The next day, Simon formally gathered Westeros Company president James Rebould, Apollo Management president Leon Black under Cersei Capital, and others to discuss acquiring Bell Atlantic.
James Rebould, Leon Black, and Amy Pascal and the rest had already been preparing the MCA acquisition for months, so they were all shocked by Simon's sudden proposal to run two acquisition tracks at once, and by his plan to acquire Bell Atlantic. Most of them didn't support the decision.
After the 1984 AT and T breakup, the federal government strongly encouraged competition in telecom. Over the years, the U.S. had grown to hundreds of telecom companies large and small. In a sense, America Online itself could be counted as one of them.
So legally, acquiring Bell Atlantic didn't face huge obstacles. The real problem was money.
Simon's two planned acquisitions, Daenerys Entertainment's purchase of MCA and Westeros Company's purchase of Bell Atlantic, required seven billion and eight billion dollars, adding up to fifteen billion in total.
However, after year end settlement and distribution from Cersei Fund Management, the money Simon could bring back from overseas, after twenty eight percent capital gains tax, would only be around six billion. In other words, to complete both acquisitions, Simon still needed to raise at least nine billion dollars in cash.
Nine billion. If it all came from loans, with a ten year repayment term, the entire Westeros system would need to shoulder more than one billion dollars a year in debt principal and interest. In this era, even the biggest Fortune 500 giants couldn't guarantee they'd earn a billion every year.
With a debt burden that heavy, one wrong step and the business empire Simon had built over these years could collapse.
And in terms of targets, Leon Black, who had thrived in the 1980s leveraged buyout boom with Drexel, also believed Simon's choice of a regional telecom carrier was not a good one.
Buying MCA would let Daenerys Entertainment strengthen its Hollywood foundation and gain full spectrum synergy in music, television, theaters, and theme parks.
Buying Bell Atlantic put Simon into a completely unfamiliar industry, and even after the acquisition, Bell Atlantic's growth ceiling seemed limited.
After all, since Bell Telephone and Telegraph was founded in 1887, America's telecom industry had already undergone a century of development. In telephone services, the Bell system had reached its peak.
Even at the height of the 1980s leveraged buyout boom, no one had targeted the seven Baby Bells carved out of AT and T, largely for that reason.
A standard leveraged buyout would rapidly reduce debt by breaking up and selling off assets after the merger. But after the 1984 breakup, the regional telecom companies were desperate to preserve market share, fearing that countless smaller telecom firms would nibble away their territory. If they were broken up, their value would plunge. And due to telecom regulation, they couldn't expand further to build scale advantages.
Simon's plan to buy Bell Atlantic was to operate it long term, not run an LBO play. So he couldn't reduce debt through asset sales either.
Moreover, even if things went as Simon expected and the federal government loosened telecom regulation in the coming years, allowing regional carriers to expand through mergers and move beyond local calling into long distance, cable television, and other fields, that would still take time.
Before that happened, if Bell Atlantic couldn't digest the enormous debt from Westeros Company's acquisition, then when regulation finally opened, the company would have little capital left to invest in expansion. It might instead become a takeover target for other telecom giants.
Simon knew James Rebould and Leon Black's advice was all solid gold, and he understood that the acquisition of Bell Atlantic, and the expansion afterward, would not be as simple as he imagined.
Years later, among the seven Baby Bells, only Verizon, evolved from Bell Atlantic, would remain as America's second largest telecom company. The other six regional carriers would disappear in the merger waves around the turn of the new century.
Still, behind the challenge lay enormous opportunity.
In the 1990s, telecom wasn't just traditional phone service and the cable TV business that would be reopened to telecom companies. Two massive industries would also rise quickly: mobile communications and the internet. It was these new fields that would create a hundred billion dollar integrated telecom giant like Verizon.
The Westeros system's discussion about running both acquisitions at once lasted the entire weekend.
In the new week, the debate continued, and Forbes released its new year Forbes 400 list, instantly drawing countless eyes once again.