American History 1988
Chapter 141 - 135: A Business That’s Sure to Profit Without Loss

Chapter 141: Chapter 135: A Business That’s Sure to Profit Without Loss

"Dean, I think I didn’t hear you wrong just now. Did you say Compuserve’s shares?"

Even though Robert was prepared to be hit with a big demand, this condition still exceeded his expectations.

These were shares we’re talking about! Not some trivial, preferential terms for Price’s List!

Seeing Robert’s incredulous look, Dean just smiled and tapped his finger on the coffee cup on the table.

"Robert, just like I said before, only by embracing more advantages can the coffee taste better, and the coffee shop survive in the competition."

Robert’s face still showed disbelief. "Dean, I think you might have misunderstood something about Compuserve. Although we’re very eager to join the NSF network, that’s not enough to..."

"Robert, let me finish first," Dean interrupted the agitated CEO of American Online, "I won’t take your shares for nothing, what I’m giving is US Dollars!"

"What?!" Robert was confused. One moment it was about network interconnection, the next, US Dollars. What in the world did he want to do?

"Listen, Robert," Dean leaned slightly forward, his eyes earnest. "I need to purchase Compuserve’s publicly traded shares at 30% below market price. In exchange, I’ll help you join the privatization plan of the NSF network."

That was Dean’s real goal; he wanted to seize this opportunity to acquire a large number of American Online’s stocks.

As for why, it still had to do with the upcoming NSF network privatization.

Since the National Science Foundation had already brought up this discussion publicly, the outcome of privatization was almost certain.

Once the public digested this news, they would realize that a new emerging Internet communication market was about to be born.

Just like the current telephone companies, AT&T, WorldCom, MCI, Sprint...

If nothing unexpected happens, a bunch of giants like these will also emerge among internet service providers.

By that time, when the NSF network announces the names of the internet service providers it endorses, companies like UUNET, PSI, Compuserve will definitely be pursued by major capitals.

Financing or buying stakes, in any case, it would be another voracious feast.

And why did Dean specifically target American Online, the overlooked Midwest company? Because American Online was the only publicly traded company on the list!

Once the National Science Foundation’s office made the announcement, as the sole publicly traded company among internet service providers, American Online’s stock was bound to soar!

Dean had neither the capital nor the connections to get involved in the capital games of UUNET and PSI, and those old East Coast moneybags wouldn’t play with him.

Therefore, the conveniently located American Online was the best choice, and what’s more, due to current environmental and policy restrictions, its stock price was astonishingly low.

American Online, established in the ’60s, just as its name implies, Compuserve~a computer service company.

Back then, its business was time-sharing computer services, which meant allocating the idle computing power of mainframes to home users.

In that era, there were no personal computers, and companies used mainframes from the likes of IBM, priced at several hundreds of thousands of dollars.

Individuals or families that needed accounting processing or data computation would rent time-sharing services to help them complete these tasks.

For this reason, rental companies like Compuserve that provided mainframe services were born, as demand created the market.

In the sixties and seventies, this business was booming, and American Online even went public with its help.

Later, with the advent of personal computers, time-sharing services were phased out, and American Online gradually transitioned to a private internet service provider.

Otherwise, with network services alone, American Online could never have gone public.

But as a private network with limited scale, both the market value and stock price of American Online performed poorly.

But now with the good news, so Dean prepared to enter the fray.

However, no matter how lackluster it was, American Online was still a publicly traded company, and Robert had his own concerns.

"Dean, if I’m not mistaken, the number of publicly traded shares you want isn’t a small amount, right?" As CEO, Robert needed to understand the reason behind Dean’s actions.

Was he trying to take advantage of the positive news to heavily harvest from the stock market, or did he have ambitions of becoming a shareholder of Compuserve to be involved in the company’s future decisions?

This was not just about the interests of Compuserve but also about Robert’s own interests.

Seemingly aware of his concerns, Dean smiled and spread his hands, "Come on, I’m just looking to make a bit of money on the side. I have no intention of getting involved in Compuserve’s decision-making.

Of course, if you want me to offer some suggestions to make Compuserve more popular, I wouldn’t refuse."

Dean remembered all the ridiculous maneuvers of American Online, that insane pay-per-search, which was practically akin to ensuring a hastened demise in the wave of network privatization.

Robert automatically ignored his last sentence. If it was just about making a quick buck on the stock market, then this was much easier to accept.

At least when he first heard Dean wanted shares of Compuserve, Robert thought the other party wanted something for nothing.

Now that Dean was willing to pay, even though there was a discount on the price, it was much better than getting nothing.

With a sigh of relief, Robert finally had the peace of mind to take a sip of the coffee in his hand. "Dean, let’s talk numbers. However, I must clarify that the final decision lies with the board of directors."

"Compuserve’s current stock price is 4 dollars, and its total market value is around 300 million dollars, right?" Dean had been doing his homework on American Online recently.

"Yes," Robert nodded expressionlessly, unsure how Dean, as a student, had the confidence to talk about stock acquisition.

"At the condition just mentioned, below 30% of the market price, I need 3 million dollars’ worth of circulating shares." Dean said, giving Robert quite a shock.

"3 million dollars?!" Robert nearly spilled the coffee in his hand. "Dean, where did you get so much money?"

Yes, that was Robert’s first reaction. Mother F*cker, this was 3 million dollars! Not 300 dollars!

"Robert, inquiring about someone’s wealth is not gentlemanly behavior," Dean summoned the waiter with a gesture and had his coffee replaced.

"I own three companies; there’s nothing unreasonable about it. Besides, that’s not the point, the business we were talking about is."

Reminded by him, Robert then remembered having recently inspected the entrance of Byte Company.

Alright, some things were beyond his comprehension.

"Dean, with 3 million dollars to acquire 70% of the market price for circulating shares, that’s equivalent to owning 1.3% of Compuserve’s shares.

Among all the shareholders of Compuserve, that percentage is enough to make one a major individual shareholder."

"That’s just being a major individual shareholder, right?" Dean knew that this share of stock was no threat to America Online.

Let’s not forget America Online has its parent company, and the tiny bit Dean wanted was no problem for them; he knew they could find a way to do it.

"Robert, let me remind you. By April at the latest, the National Science Foundation’s office might announce a certain policy.

You know, I’m an insider; I have my own sources."

Robert’s face twisted slightly as he weighed the pros and cons.

"Think about it, once the NSFnet accepts privatization, what will the situation be like?" Dean drew a circle on the table with his finger, "All of North America will become a free market.

Hasn’t Compuserve always dreamt of expanding its market? You have an advantage over others, a trivial 1.3% share in exchange for an entire continent.

I don’t think it’s a hard choice, and most importantly, I’m paying for this 1.3% share in US dollars. The real loss for you is just 0.3%!"

"OK!" Robert sighed deeply, "I will persuade the board, but I can’t guarantee the result."

The privatization of NSFnet was too important for America Online; they dreamed of bringing the NSFnet of Ohio under their banner.

At that time, the scale of internet users would no longer be in the hundreds of thousands or millions; it could be a doubling of growth.

Most importantly, this was just Ohio. As long as the government removed restrictions, America Online would definitely advance aggressively into the North American market.

With a market value of 300 million dollars, a share of 0.3% would be 900 thousand dollars. Robert felt this deal was worth doing.

"I’ll wait for your good news, Robert~" Dean smiled, extending his hand.

"Dean, I hope you keep your word," Robert looked at him deeply. From now on, he didn’t see Dean as just a student anymore.

"Of course, we’ve always enjoyed working together, haven’t we?" After the handshake, Dean took his leave from the cafe.

He knew Robert and his team would soon return to Ohio. For the upcoming transaction, Dean needed to make sure the funds in his account were ready in advance.

Last year, he made 1.8 million dollars from rental income, and in January, Byte Software paid out dividends of 750 thousand dollars.

If he added the rental income from the last three months, Dean should just be able to muster 3 million dollars.

He knew America Online’s stock would surely rise; it was the only publicly traded company among the private network operators.

With the public’s investment enthusiasm having nowhere else to go, America Online would become the sole option in the stock market.

Even if America Online’s stock did not budge an inch, Dean would still net 900 thousand dollars in profit. Oh, but he’d have to deduct some taxes.

In any case, if the deal went through, losing money was nearly impossible.

As for why Dean didn’t use more funds to reap from the stock market, setting aside whether America Online would agree, he wasn’t a gambler himself.

As long as he followed an orderly development, everything would come in its time; there was no need to put all the eggs in one basket.

Plus, a 1.3% share wouldn’t cause America Online too much concern, but once that number exceeded 5%, that would be a completely different story.

If things went well, Dean should have a decent gain this time.

Having been in America for such a long time, he, too, had learned to use every resource around him to exchange for his own benefit.

The privatization of NSFnet was just a small test for him; see, in America, anything can be turned into business.

Honestly, Dean wasn’t worried in the least whether America Online could get him the shares at 30% below market price.

There are countless ways to play the game of capital, and the law is just a rule that bounds the poor.

Why do the rich spend so much on legal fees every year? A big part of it is devoted to legitimate tax evasion and legalizing those gray income streams.

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