Chapter 1141 – The Little Tyrant is getting listed
The biggest three gaming consoles manufacturers had slashed their consoles’ and games prices simultaneously, making it a disaster for Sega.
Microsoft had supported Sega in the past, but Microsoft stopped supporting them later. Now, Sega’s sales are dropping, and their brand awareness is getting worse.
Sega cannot afford to slash their selling price as they are already not making profits now. If they slash their price, they will suffer losses. Sony, Nintendo, and Gbox can afford the losses but not Sega.
Within a month, Sega gave up because their console had sold less than 100 units globally!
Sega shareholders were in despair. When Microsoft wanted to acquire them, they felt the price was too low. Now, Microsoft is not interested even if they are willing to sell their shares at losses.
Although Gbox’s sales are lower than Nintendo and Sony’s, it is much more than Saga. It’s not easy for a new gaming console brand to clinch third place in terms of sales.
Also, Gbox’s advertisements are everywhere and had received positive reviews. Of course, many of the reviews were paid reviews, but one has to admit that Gbox’s games are very popular. Gbox is built like a PC, and its specifications are very powerful.
Gbox will be introducing the highly anticipated Gbox-live soon, and it is more advanced than Sony and Nintendo.
But Sony and Nintendo have more supporters, as they are in the industry for much longer and had launched sequels for their classic games.
Duan Yongping also noticed a common characteristic for both companies’ consoles. Their console’s average lifespan is around five to seven years. That means their previous generation of consoles is about to break down.
This is the best time to sell new gaming consoles, and the companies have stopped servicing old machines. Duan Yongping quickly learned this strategy.
This strategy was used on most electronics products in the future. MP3 players, mobile phones, laptops, PCs, etc., seldom will last more than five years without repairs.
Five years later, even if the device is still working, it will be much slower than before. Thus, you will be forced to upgrade it. This way, consumers will have to constantly buy new products.
If all devices are as durable as the miraculous Nokia phone, which can last at least ten years, new products will be unsellable.
Feng Yu also noticed it. Companies did not introduce newer models because the previous model is outdated. It is because the lifespan of the previous model is almost up.
Many users had gotten used to gaming consoles, and even men in their thirties will buy one for their homes.
“Manager Feng, although our sales are increasing, our losses are also increasing. Microsoft share prices had risen a little because of this console, but we are not a listed company.” Duan Yongping is feeling pissed. They are the ones suffering loss from this loss-making promotion.
“Do you want to get Aiwa Little Tyrant listed?” Feng Yu asked with a smile.
Aiwa Little Tyrant is located not far away from the Shenzhen Stock Exchange, and Duan Yongping passes by there every day.
To develop Gbox, Aiwa Little Tyrant had passed its Reading Machine, cordless phone, electronic dictionary businesses to Aiwa Electronic. These were all suggested by Duan Yongping.
Duan Yongping had thought Gbox can bring in higher profits, but they are suffering losses now. This year, the shareholders will not get any dividends. The company might not even have enough money to give to their employees as bonuses.
Duan Yongping personally does not suffer any losses. He received some Aiwa Electronics shares for giving up his profit-making businesses, and he could tell Manager Feng is satisfied with his performance. He might even try to get the position of Deputy CEO of Tai Hua Holdings in the future.
Zhong Qingxian is very supportive of Duan Yongping. In Tai Hua Holdings, Duan Yongping might have a shorter duration of service. Still, he feels no one is as good as him in terms of capability, other than Feng Yu.
“Manager Feng, Aiwa Little Tyrant is running short of funds. We need to develop better consoles. For the company to operate smoothly, the shareholders must either inject more funds, or the company must get listed.” Duan Yongping explained.
The company should raise funds through the stock market. Even if the company fails, the losses will be minimized. Anyway, this Gbox is a long-term project, and it is confirmed the first generation will not make any profits. The second-generation console will need at least another three to five years.
Will Tai Hua Holdings continue to inject funds into Aiwa Little Tyrant for the next three to five years? This will not be a good investment decision.
Feng Yu looked at Zhong Qingxian. “Old Zhong, what do you think?”
“I think what Old Duan said is right. Everyone is selling their products at a loss. Nintendo and Sony have listed companies, and their share prices will rise if their products are selling well. This way, they can recover their losses through their share prices. But we are not the same. We must keep injecting funds into the company to keep it running, and it will use up lots of our cash reserve.”
“Have you all discussed with Microsoft’s representative? Do they agree to let Aiwa Little Tyrant get listed?”
“They agreed.” Duan Yongping replied.
Feng Yu thought for a while. “Don’t get listed in China. The support for the gaming console is not high in China, and we will not raise any funds. Ok. Get listed on the Hong Kong Stock Exchange. It is not far from here, and we can raise more funds. Old Zhong, get someone to write up a listing proposal, and we will get Aiwa Little Tyrant listed early next year!”
Feng Yu does not mind injecting more funds into the company, but like what Zhong Qingxian said, it’s not worthwhile to do so. Anyway, they will still have the final say after the company is listed, and there’s nothing wrong with raising funds now. If those investors can hold on to the company’s shares for five years, they can still get high returns.
If Microsoft dumps their shares after the share prices went up, it will be better for Feng Yu. Feng Yu can produce this gaming console by himself, but he knows Microsoft will never sell off their shares. This investment is nothing to Microsoft, and it is an important strategy for Microsoft. If it’s Feng Yu, he will also not sell the shares, but will further increase his shares.
Sony and Nintendo want to compete with us to see who will last longer with all these losses?! We will raise a few hundred million, or even over a billion HKD, through this listing. Let’s see who will have the final laugh.
