Dong Qiangqiang's Story of Leaving Germany

Chapter 688 688. What I want to know is your opinion
"The reason." Duanmu asked, "I gave you so many companies' information at the same time, why did you choose this company instead of other companies?"

Dong Qiangqiang had just carefully sorted out all the materials on the weekend, and after a few seconds of quick recall, he said calmly: "My reasons are two points: Xerox's business growth is sluggish, and financial scandals are entangled."

Duanmu laughed: "It's different to study literature, continue."

"As one of the old "Fortune" Fortune 500 companies, American Xerox, which is mainly engaged in office equipment and known as the "world's copier king", has been inextricably fighting with its old rivals Kodak and Hewlett-Packard in the 90s. Millennium Years later, because product innovation lagged behind, it gradually fell behind in the competition in the global market. Especially when the Japanese company Canon emerged suddenly, Xerox not only lost market share in countries other than the United States, but even in the United States. A feeling of being overwhelmed and overwhelmed."

"Well, lackluster growth. Then?"

"The scandal means that Xerox's market share has been eroded by Kodak, Hewlett-Packard on the left, and Canon on the right, but what is surprising is that the company's revenue has not been stable for several years. Other companies were stunned. Before the applause and wonder had completely disappeared, Xerox was reported by the company's internal financial manager to the US Securities and Exchange Commission for alleged financial fraud. After being investigated, the company had no choice but to admit that it had Distorted the accounting standards in the financial statements for the first time, and re-audited the annual financial reports released a few years ago. I specifically checked, and the newly disclosed financial reports have greatly reduced revenue and profits without exception, and at the same time revealed the company's debt scale The amount has reached tens of billions of dollars. Because of this series of incidents, Xerox was also downgraded by Moody’s, one of the three major international rating companies.”

Duanmu didn't say a word, and waited patiently for Dong Qiangqiang to finish speaking.

"In order to clean up the decadence, Xerox changed a new CEO last year and carried out a series of drastic innovations, such as layoffs, selling bad assets to repay huge debts, strengthening core businesses and other new strategies to cut costs and increase profits. However, due to the post-911/10 U.S. The economy continues to be turbulent, the products lack market competitive advantages, and the company's efforts to improve operational efficiency have not received immediate results. After all, Rome was not built in a day. The decrease in revenue has led to shrinking profits, and the stock price has continued to decline. Compared with last year The target stock price of $6 given by Wall Street seems to be only a few dollars now. Xerox issued a profit warning for 2001 earlier this year, which attributed the loss to the exchange rate loss of the U.S. dollar against foreign currencies and the tax rate adjustment in the United States.”

"That's all?" Duanmu seemed disappointed, "Is that all?"

Dong Qiangqiang heard the dissatisfaction in Duanmu's tone, and cleared his throat: "I made a special count, and most of the US listed companies that have problems in the past two years are related to financial fraud, and the means of fraud are nothing more than fabricating non-existent income. Or put next year's income into this year in advance, and reduce the accounting of expenses and liabilities. Enron, WorldCom, Global Crossing, Xerox, no exception, I suspect that these companies deliberately achieve exaggerated book profits through accounting methods in order to cater to Wall Street's profit expectations , to use a catchphrase: This method is very 'safe'."

"I understand what you mean." Duanmu said coldly, "But if this is the reason why you chose Xerox, I can only say that I am very disappointed."

Dong Qiangqiang didn't seem surprised by Duanmu's statement, and continued: "Although I may choose Xerox, to be honest, I am also very worried."

"worry about what?"

"Many people think that the U.S. stock market collapsed after being hit by 911/2001, but in fact many U.S. stocks began to decline almost from the beginning of 70. In the past year, the decline rate of many companies' stock prices even exceeded 911% , whether it is the Dow Jones or the Nasdaq. Although 10 triggered a second round of sharp (crash) declines, after the stock market fell to October, the stocks that fell the most before all rebounded to varying degrees, and even more Some rebounded by more than 50%. The market did not completely collapse because of 911/11. Instead, a wave of Mavericks emerged. It seems that the terrorist attack reunited the scattered market and the already scattered hearts. Global investors are using their hands The banknotes express their determination to fight against terrorism. In order to boost the economy and accelerate the recovery of the market, the Federal Reserve cut interest rates 10 times last year, which is unique in the history of American finance. Through the previous [-] interest rate cuts, people can find that: each time the interest rate is cut Less than a month later, funds will flow intermittently to the stock market, and then the stock market will rise slowly. So I think that Xerox has the dual possibility of shorting and bottoming out. I know it sounds nonsense, and it may fall, It may rise, but I really think so. Or I should put it this way: it may rebound in the short term, but I am still bearish on it in the long term, because the financial problems it burst out may be just the tip of the iceberg. If there are more in the future If the news broke out, I am afraid that a short-term rebound will not be able to save the stock price. If this is the case, maybe we should not choose to short the stock, but it is safer to buy its three-month or six-month put option.”

After Dong Qiangqiang finished speaking, he let out a long breath and waited quietly for Duanmu's comment.

"Do you know why I chose you as my joint partner?" Duanmu suddenly asked without thinking.

"do not know."

"Because you give me the feeling that your way of thinking and solving problems is different from others. For example, everyone will go to an agency to find a job, but no one will think of catching wild boars. Few people will think of learning to drive first and then become a tour guide. "

"Wild boar." Dong Qiangqiang tried to ease the slightly awkward atmosphere, "I can't afford wild boars."

"I was upset just now not because you said you wanted to be short or long Xerox," Duanmu was not annoyed by Dong Qiangqiang's correction, "but I thought you were just parroting the views of other investors in the materials I gave you , but your thinking and your judgment are not there, so it’s not your opinion, and what I want to know is your opinion, which is different.”

Dong Qiangqiang listened quietly, without rebuttal, he knew what Duanmu said was right.

"You know that the secondary markets in developed countries in Europe and the United States are open markets, and all investors can get the same information from the open markets, but please remember that what you can see is only what others want you to see, not what others want you to see. It means that it completely reflects the whole content. More information hidden behind needs to be analyzed by yourself. Every investor will make different judgments on the same data based on his own cognition. Some people will be optimistic about the data. , and some people will be pessimistic. But only the result of your own analysis combined with data, common sense and logic is something valuable to you. And this kind of thing, Wall Street will not share it with you for free. As you said, Enron, Arthur Andersen, WorldCom, Global Crossing, Xerox and other problematic companies have long been studied and rotten, so there is no room for making money. If we want to make money, we should not waste too much time on such companies, but should hurry up Time to find the next Enron, the next Worldcom and the next Xerox as soon as possible."

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(End of this chapter)