"What's the reason?" Duanmu asked, "I gave you information about so many companies at the same time, why did you choose it instead of other companies?"
Dong Qiangqiang had just carefully sorted out all the materials over the weekend. He quickly recalled it for a few seconds and said calmly: "My reasons are twofold: Xerox's business growth is weak and it is plagued by financial scandals."
Duanmu was happy: "Those who study literature are different, continue."
"As one of the oldest Fortune 500 companies in the world, Xerox of the United States, which specializes in office equipment and is known as the 'King of Copiers in the World', was at odds with its old rivals Kodak and Hewlett-Packard in the 1990s. After the millennium, due to Product innovation lagged behind, so it gradually fell behind in the competition in the global market. Especially after the sudden emergence of Japan's Canon, Xerox not only continued to lose market share in countries other than the United States, but even in the United States, it gave people the impression that it was in decline. , the overwhelming feeling.”
"Well, growth was lackluster. And then?"
“The meaning of being riddled with scandals is that Xerox’s market share has continued to be eroded by powerful rivals such as Kodak on the front, HP on the left, and Canon on the right. But what is surprising is that the company’s revenue has been falling for several consecutive years. The price fell but rose, and other companies were dumbfounded. Just before the applause and exclamation completely disappeared, Xerox was reported to the U.S. Securities and Exchange Commission by the company's internal financial manager for suspected financial fraud. After being investigated, the company reluctantly admitted that it had committed multiple The accounting standards were distorted in the financial statements for the first time, and the annual financial reports released a few years ago were re-audited. I checked specifically and found that the newly disclosed financial reports without exception significantly reduced revenue and profits, and at the same time exposed the company's debt situation. The volume has reached tens of billions of dollars. Because of this series of changes, Xerox was also downgraded by Moody's, one of the three major international rating companies."
Duanmu said nothing and waited patiently for Dong Qiangqiang to finish speaking.
"In order to wash away its decadence, Xerox replaced its CEO last year and carried out a series of drastic reforms, such as layoffs, selling non-performing assets to repay huge debts, strengthening core businesses and other new strategies to cut costs and increase profits. However, due to the post-911 United States The economy continues to be turbulent, and its products lack market competitiveness. The company's efforts to improve operational efficiency have not yielded immediate results. After all, Rome was not built in a day. Lower revenue has led to shrinking profits, and the stock price has continued to decline in response. Compared with last year, The target stock price of $10 given by Wall Street now seems to be only a few dollars. At the beginning of this year, Xerox issued a profit warning for 2001, which attributed the loss to the exchange rate loss of the U.S. dollar against foreign currencies and the adjustment of domestic tax rates in the United States."
"That's all?" Duanmu seemed disappointed, "Is that done?"
Dong Qiangqiang heard the dissatisfaction in Duanmu's tone and cleared his throat: "I made special statistics and found that most of the problems faced by American listed companies in the past two years were related to financial fraud, and the method of fraud is nothing more than fabricating non-existent income. Or bring next year's revenue into this year in advance, while reducing expenses and liability accounting. Enron, WorldCom, Global Crossing, and Xerox are no exception. I suspect that these companies are deliberately using accounting techniques to achieve exaggerated book profits in order to cater to Wall Street's profit expectations. , to use a popular saying: This method is very 'enron'."
"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 did not 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 believe that the U.S. stock market completely collapsed after being hit by 9/11, but in fact many U.S. stocks began to decline almost from the beginning of 2001. In the past year, the stock prices of many companies even fell by more than 70%. , whether it is the Dow Jones or the Nasdaq. Although 911 triggered the second decline, after the stock market fell to October, the stocks that had fallen the hardest before had rebounded to varying degrees, and even worse. It rebounded by more than 50%. The market did not completely collapse because of 911. Instead, there was a wave of bullishness. It seemed that the terrorist attack reunited the scattered market and the already scattered people. Investors around the world are expressing their feelings with the banknotes in their hands. They share the same hatred for terrorism. In order to boost the economy and accelerate the recovery of the market, the Federal Reserve cut interest rates 11 times last year, which is unique in U.S. financial history. Through the previous 10 interest rate cuts, people can find: each rate cut resulted in less than For a month, funds will flow to the stock market intermittently, and then the stock market will rise slowly. So I think Xerox has the dual possibility of short selling and bottoming out. I know it sounds nonsense to say this. It may fall or rise. , but that’s what I really think. Or I should put it this way: it has the possibility of rebounding in the short term, but I am still bearish on it in the long term, because the financial problems it broke may be just the tip of the iceberg. If there are more violent news in the future, Out, I am afraid that a short-term rebound cannot save the stock price. If this is the case, maybe we should not choose to short the stock, but it is safer to buy a three-month or six-month put option on it.”
After Dong Qiangqiang finished speaking, he took a long breath and waited quietly for Duanmu's comments.
"Do you know why I chose you to be my joint partner?" Duanmu asked suddenly without knowing anything.
"have no idea."
"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 becoming a tour guide. "
"Wild boar." Dong Qiangqiang tried to ease the slightly awkward atmosphere, "I can't afford to offend wild boars."
"I was not upset just now because you said you wanted to be short or long Xerox," Duanmu was not angry at 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 is not your point of view, and what I want to know is your point of view, and the two are different."
Dong Qiangqiang listened quietly without refuting. He knew what Duanmu said was right.
"You know that the secondary markets in developed countries in Europe and the United States are public markets. All investors can obtain the same information from the public market, 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 reflects the entire content completely and truly. More information hidden behind needs to be analyzed by yourself. Every investor will make different judgments on the same data based on their own cognition. Some people will be optimistic about the data. , and some people will be pessimistic. But only the results you analyze by combining data, common sense and logic are valuable to you. And this kind of thing, Wall Street will not share it with you for free. As you said, Problematic companies such as Enron, Arthur Andersen, WorldCom, Global Crossing, and Xerox have long been studied poorly, so there is little room for making money. If we want to make money, we cannot 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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