American History 1988
Chapter 199 - 193: The Tricks of Capital

Chapter 199: Chapter 193: The Tricks of Capital

Late in December, just a few days away from Christmas, banners celebrating the festival adorned the streets everywhere.

Christmas trees in the shop windows, red and white Santa hats, and the tinkling sounds of music.

All these things added to the festive atmosphere, and the passing pedestrians discussed the upcoming holidays with smiles on their faces.

Dean turned away from the blinds by the conference room and began to speak in a relaxed tone.

"So, gentlemen, let’s wrap up our last meeting of the year."

"I’ve already booked my flight for this afternoon; in a few hours, I’ll be on Palm Beach in Florida, enjoying a delicious Bordeaux wine."

Valentine blew a breath in Dean’s direction, wafting thick cigar smoke that drifted through the conference room.

"Come on, you know I don’t like them," Dean said, fanning away the smoke with some papers. "I’d rather chew gum."

"Look, this kid’s a country bumpkin just like me," Valentine said, turning to Durell and the others with a cigar still in his hand, teasing them.

"Valentine, if you want to enjoy that Bordeaux wine this afternoon, you better put out that damn cigar," said Durell.

Durell was a workaholic, the monk-like sort. He hated the smoke; it made his nose uncomfortable.

Valentine shrugged towards David Morgentaler and put out his cigar; both of them were seasoned smokers.

"OK, let’s take a look at our harvest for the year."

Without the cigar, the only thing that interested Valentine now was Byte Company’s financial report.

"I’m keen to start my vacation early, too. I even sacrificed my summer holiday this year."

Dean cocked his head, signaling Jimmy Trebik to begin.

The meeting attendees included not only the board members but also several executives from Byte Company.

"Gentlemen, it’s clear that we’ve reaped a bountiful harvest this year," Jimmy started, opening his materials. "Although the media has speculated variously about our performance, the truth is even better than those guesses."

Jimmy’s opening sentence spread joy throughout the room—wasn’t this the best news one could hope for?

"In the past year, which coincidentally marks Byte Company’s first anniversary,

our Teams software has gone through two major version upgrades and numerous routine updates.

And our user base has skyrocketed from less than 10,000 at the beginning to 1.14 million by year-end.

In other words, this year we sold 1.13 million copies of Teams!"

"Cool!" Marcus excitedly jumped out of his chair.

"Guys, we’re going to be rich!" He wiggled around the conference room, completely oblivious to everyone around him.

But no one laughed at him because they were all celebrating the incredible achievements.

Valentine lit his cigar again while Durell brought out the champagne he had prepared.

David Morgentaler, the eldest, watched everything with glee, remaining more composed than anyone else.

Dean raised his glass of champagne Durell had prepared, toasting everyone, "Guys, to Byte software, cheers!"

"Cheers!" echoed the crowd in unison.

With the slightly sweet champagne exploding on his palate, Dean’s mood became even more delightful.

"Come on, give me some more good news," Dean put down his glass, urging Jimmy to continue. "Our user demographics, our sales volume."

"As you wish, Boss," said Jimmy, sipping his champagne before wiping his mouth and resuming with the report.

"Byte Company’s total sales for ’90 reached 157 million US dollars, with a net profit of 30 million US dollars after taxes.

Our profit margin surpasses the 15% average of the software industry; we’re even outperforming Oracle and Microsoft.

Of the 1.14 million users, 78% chose the VIP version annual subscription, thanks to our technical team’s diligent updates.

Nearly 900,000 annual subscribers, guys, this means that next year, Byte Company’s conservative sales figures could reach 132 million US dollars!"

"Shit!" Valentine slammed his cigar into the ashtray, then laughing heartily slapped Dean on the shoulder, "We’re really going to be rich, Dean!"

"Yes, I can see that." Nothing excited Dean more than these enchanting figures; he loved them.

"What are our sales targets for next year?" Durell asked calmly.

"After calculations by the finance and marketing teams, our domestic sales target for next year is 251 million US dollars with an expected growth of 60%."

"That’s too low," Durell stood up, gesticulating with his arms. "America has a population of 250 million, nearly 100 million households.

Of these, 60% are middle-class families registered with the federal government, meaning there are at least 30 to 60 million office workers!"

million, a figure that made everyone in the conference room tremble with excitement.

Even eliminating certain special industries, the Teams software still had a vast market potential.

"I think the growth should be at least three times that!" Durell paced back and forth in the meeting. "Don’t forget, we also have the global market."

Jimmy was shocked by this target and looked to his Boss for help.

But to his astonishment, not a single person in the conference room opposed Durell’s target.

Dean waved his hand, signaling for him to sit down, and Jimmy immediately felt relieved.

Triple?! Heaven knows, Jimmy had never seen any company he worked for set such a target.

Typically, a large corporation or a mature company would have an annual sales growth target of about 20% to 30%.

Jimmy had doubled the target for Byte Company, but to Durell, it seemed like it was off by an order of magnitude.

"Let’s discuss next year’s targets after Christmas, but speaking of the global market, gentlemen, it’s time for us to make a decision."

With a gesture from Dean, Jimmy distributed the documents to everyone.

"Right now, Byte Company’s book profits are 30 million US Dollars, but the global market expansion next year is expected to require up to 40 million US Dollars in capital.

So how should we handle this capital now?" Dean spread his hands innocently, looking at everyone as he solicited a decision.

Valentine snapped open his lighter with a pop. Durell sipped his champagne, a faint smile playing at the corners of his mouth.

For Marcus and David Fero, it was odd why Dean would ask such a question?

If expansion required more capital, then of course, the profits should be retained and invested in next year’s global market.

However, the more flexible-minded Marcus keenly observed Jimmy and Joe, and other executives, whose eyes flickered as though they were secretly anticipating something.

"Dean," just as the office fell into an eerie silence, David Morgentaler spoke casually.

"Since Byte Company has turned a profit, then of course it’s dividend time. Guys have worked hard all year; they’ve earned it."

Whew—Jimmy, Joe, and Ross, a few of the executives, had the seriousness of their expressions replaced by heartfelt smiles.

Marcus and David Fero looked puzzledly at Dean. The company was short on funds, so why distribute dividends now?

"What is the dividend ratio?" Dean didn’t pay attention to Marcus’s questioning gaze as he continued to inquire.

"How much money is left on Byte Company’s books?" Durell’s gaze deepened.

"About 50 million US Dollars," Chief Financial Officer Ross provided the answer.

With year-end approaching, payments from distributors had begun to arrive, so Byte Company temporarily had ample funds on the books.

"Very good," Durell smirked, "Then..."

"100%," Valentine interrupted Durell, his forthright nature making him always so direct.

Durell laughed off the interruption and shrugged, indicating he had no objections.

"100%?" Dean raised an eyebrow; the figure was even more aggressive than he had imagined.

"Hold on gentlemen, shouldn’t we keep some as a budget for next year?" Marcus did his homework too.

As he knew, even when a company paid dividends, it wouldn’t disburse all its profits, usually the rate was between 50% and 70%.

But Byte Company was preparing to distribute dividends even before going public, and even 100%?!

Mother F*cker, Marcus felt all the business knowledge he had learned before was nothing but lies.

Look, what was happening now didn’t match at all with what the textbooks said.

David Morgentaler smiled at Marcus and then turned his gaze to Dean.

"Dividends and tapping into the global market are not conflicting actions. Dividends are our money, and of course, the global market should be expanded with someone else’s money."

"Exactly!" Valentine clinked his glass on the table to show his agreement, "No one can take our money."

Can a company distribute dividends before going public? Of course! There’s no law against it.

Come on, this is 30 million US Dollars. No one would be foolish enough to leave this money for next year’s operating budget.

Byte Company hasn’t yet gone public, and it was still open to other investors.

Therefore, disbursing the already secured money now was the most correct approach.

As for the capital needed to expand into the global market, naturally, there would be others who would foot the bill.

Even just now, Durell had been considering cashing out all of Byte Company’s funds in the form of dividends.

Is a 100% dividend ratio extravagant? No, Valentine thought it was his generosity that had interrupted Durell’s more aggressive approach.

Only after Dean had seen the darker operations on Wall Street would he understand that Valentine really considered him a friend.

Take all Byte Company’s available funds, and it would be best to borrow a large loan from the bank before doing that.

Then pocket all that money as dividends; that was the correct approach of capital.

As for the financial statements, there would be someone to sort it all out.

And the loans incurred, as well as the capital needed for the company’s operations, would be willingly offered up by the next wave of suckers.

Look, everything was within procedure, so who could resist such a temptation?

"Dean, distributed dividends won’t affect Byte Company’s next round of valuation," David Morgentaler seemed to guess Dean’s concern.

He put down the document in his hands and explained to him with a smile, "Valuation has nothing to do with the company’s net assets. The Price-Earnings ratio is the key."

"So, as long as we maintain the profits, there’s no need to worry about subsequent fundraising or the IPO?" Dean indeed had such a concern; he didn’t want to deplete resources.

"Of course," David Morgentaler said casually, "We won’t harm our own interests."

Valentine, holding his glass, gestured to Dean from afar, kid, learn something, there are so many more tricks to the capital game.

Marcus and David Fero exchanged glances, their minds muddled.

Jimmy and the rest had their eyes on Dean; everyone was waiting for his decision.

"OK, I agree."

"Oh! Boss, I love you to death!" Jimmy cheered and hugged Joe and the others with laughter.