Chapter 1044 – Lenovo wants to be listed

Other than PCs, Lenovo still has an essential business division, which is Lenovo Kingsoft Company’s software development.

The company is developing its own operating system and other programs like office software.

“The progress for the operating software is still ongoing, but the features you want for the operating system will make the files too big. It will be over 10G, and it is much higher than Win98.”

“It doesn’t matter. Just think of the PCs development speed these few years. Two years ago, 40G hard disk is the mainstream, and now, it is 80G, and the high-end PCs are all fitted with 160G. When our operating system is developed, the commonly used hard disk will be 160G or even 320G. So, it doesn’t matter for the file size to be slightly bigger, or it requires higher RAM and graphics. Most importantly, it must be easy to use.”

These next few years, hard disk technologies will be advancing fast, and even if the operating system has a high requirement for the PC specs, it does not matter. They can even market it as a high-end product in the future.

“The progress of those simplified operating systems is even slower, and we estimate it will take another five years before we can succeed.”

Five years to develop the Android system is sufficient. The concept for smartphone only comes up during that period, and it’s development have not started. The first iPhone will hit the market after 2007, and the smartphone’s development will increase rapidly from then. Smartphones will become the mainstream phones in 2010 and brought along the rise of phone Apps.

“What about the rest of the software? What is the progress of our WPS office software?”

“We estimate we can release a new version with your requirements next year. Most of the functions you requested had been completed, and some of the functions are more advanced than Microsoft. Also, all the PC manufacturers in China had started to pre-install this software on their PCs last year.

Pre-installation is equivalent to packaging the software together with the PCs. This is just like the Windows operating system. After Win98 was launched, Microsoft and Lenovo had signed an agreement which includes only the operating software, and not Microsoft Office.

Microsoft thought this will increase their profits as most PC users are used to their Office software. Even if they start charging in the future, the users will be willing to pay for them. From this year onwards, Microsoft will no longer provide free upgrades to the older versions.

But Microsoft did not expect their decision will give Lenovo Kingsoft this opportunity to pre-install their WPS office software on the PCs, letting the users get used to this new office software.

The current version is not as good as Microsoft office, but it is ‘free’ for the users. What the users did not know is that the cost of this software had been added to the PC when they purchase them.

From next year onwards, after the new and better office software is launch, Lenovo will have to charge the users. But the selling price of this software is much lower than Microsoft Office.

Despite the low prices for their Office software, Lenovo Kingsoft will still get high profits.

“Remember, the most important thing is compatibility! Regardless of the operating systems, or application software, we must be compatible with Microsoft products. If Microsoft refuses to allow this, then they will lose the whole Chinese and East Europe markets!”

“Manager Feng, you are a shareholder and Director of Microsoft. This…”

Feng Yu waved his hand. “I will dump all my Microsoft shares at the end of this year and leave Microsoft. I believe our Lenovo group have a better prospect than Microsoft, because we are doing both hardware and software, and Microsoft only has the software.”

In Feng Yu’s previous life, Microsoft market value and share prices will reach its peak at the end of the year. Feng Yu had been watching the stock market closely, and the market is showing signs of dot.com bubble bursting.

The share prices of many tech companies, which do not have any good products, had been rising several folds. How can these companies have such a high rate of returns?

These companies had used high-tech concepts to package themselves, and speculators pushed their share prices up. Once there are changes to the policies, or a big player pulls out, the share value will plunge.

Once the share prices plummet, it will create a tsunami, and the total industry share prices will be affected.

You might ask, what if there are no big players that dump their tech shares?

Feng Yu is a big player!

Feng Yu’s Microsoft shares are worth over 10 billion USD. If he dumps all his shares at once, other investors will think Feng Yu had lost confidence with Microsoft. Don’t forget, Feng Yu is also a Director at Microsoft.

This is a sign that Microsoft is in trouble.

Once Microsoft share prices plunge, it will trigger a devastating effect on all related stocks, and all technology stocks will plummet, bursting the dot.com bubble.

In Feng Yu’s previous life, the share prices of China’s internet companies, like Sina, Sohu, NetEase, etc. shot up after they got listed. For a short time, these people become China’s top tycoons.

But very soon, these companies’ value shrunk after the dot.com bubble burst. But most Chinese investors did not suffer losses, and the ones that suffered losses are the ones who speculated in the US stock exchange.

These three companies were listed in the US and used the funds raised on their development in China. Even if their share prices dropped lower than their public offering price, the companies are not affected.

Their shares, which is supposed to be worth 5 USD, was sold at 8 USD. Now, the share prices fell to 4 USD, and the companies can buy back all their shares.

This is like borrowing money with zero-interest for the company’s development, and the companies had still make some profits from it. The overseas investors are the ones who lose money and not them.

That’s why Feng Yu had told Sina, Sohu and NetEase to get listed on NASDAQ before the end of the year. They must take advantage of the rise of tech stocks to raise funds.

After the bubble burst, they will buy back their issued shares and get delisted. The companies will not suffer any losses, and the only problem they will face is, it will be hard for them to get listed again. The checks will be more stringent, and the public will not respond well to their public offering.

“Oh, Manager Feng, Lenovo is planning to get listed. Do you think we can get listed in the US?” Liu Chuanzhi asked.

“What’s wrong? Is the company running low on funds? Why do you want to be listed?” Lenovo had planned to be listed in Hong Kong last year but was stopped by Feng Yu.

“It’s not that. We are thinking of entering the US, and European markets and people know that we are a large company! If our company’s value is high, the consumers will have confidence in our brand and products.”

Feng Yu heard it and felt he should not stop Lenovo from getting listed.

“Then you should get listed in the US NASDAQ or NYSE. With Lenovo dominating Asia’s PC market, the share prices should shoot up. I can introduce a few investment banks to you.”

Lenovo will also make a huge profit from this upcoming dot.com bubble burst, and Feng Yu has no reason to stop them.

After getting listed, Lenovo will have more funds for its expansion into the overseas market. Those that look down on China’s PC and IT industry in the past will be regretting now!

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