Return to Hong Kong Island for a Century

Chapter 447 The Betting Agreement (Second Update)

Moreover, McDonnell Douglas's president knew that his most important task right now was not to worry about the stock price.

Instead, we need to quickly develop a best-selling flagship model.

This is the only way to fundamentally solve the problems encountered by McDonnell Douglas.

No matter what is said now, it cannot change the fact that McDonnell Douglas currently does not have any best-selling models.

Moreover, the president of McDonnell Douglas also sensed something unusual from the interview with the Boeing CEO at this press conference.

The Boeing CEO downplayed the main issues and presented these points.

As the president of an aircraft company, he naturally knew how many loopholes there were.

However, what the other party said is also true, so it's time to expose them now.

It doesn't mean much.

Therefore, the president of McDonnell Douglas remained in Shanghai, signing a contract with Shunfeng Company while discussing a performance-based agreement with Li Song.

So after breakfast, the president of McDonnell Douglas couldn't wait to meet with Li Song to continue their discussion.

However, this time the president of McDonnell Douglas was invited to Li Song's home.

"Mr. Li, your place is fantastic!" The president of McDougall Company said, looking at the small villa where Li Song lived, which looked quite old.

"Thank you for the compliment, Mr. President!" Li Song chuckled. This small villa was not the one he currently lived in.

"Mr. Li, news has come from New York that Boeing's CEO is holding a press conference..." McDonnell Douglas's president told Li Song the news he had received after he sat down.

Although the president suspected that Li Song already knew about the news, he still had to tell him.

That's how you create topics of conversation.

"I also think the Boeing CEO's description of you is very accurate, that is, you are a very skillful operator."

"They are also a skilled hunter, but McDonnell Douglas is not the prey in the trap; Boeing is."

"However, his incomplete statement of the facts did indeed cause their company's stock price to skyrocket!" The president of McDonnell Douglas said, looking at Li Song.

Li Song chuckled: "Thank you for the compliment, Mr. President. I actually think Boeing's response was correct."

"Because for capital, profit comes first."

"The truth is not important, and what they are stating is also true."

Li Song's words made the president of McDonnell Douglas feel that there was something more to his words, but he didn't know what he was talking about.

"Mr. Li!"

"What are your thoughts on the technology licensing agreement?" the president of McDonnell Douglas asked.

"I think, Mr. President, you haven't seen the biggest problem facing McDonnell Douglas!"

"Anyway, I'm not in a hurry. If McDonnell Douglas doesn't have a best-selling model, it will never be able to compete with Boeing."

"Although this technology is worth $1 million, which sounds like a lot."

"But I think it's nothing to McDonnell Douglas."

The reason Li Song still had the mind to argue with the president of McDonnell Douglas was mainly because the patent application had not yet been published.

Once the patent reaches the publication period, you can begin detailed negotiations with McDonnell Douglas.

In fact, Li Song prefers performance-based agreements because they allow him to earn more money.

Of course, Li Song also knew that the reason why the president of McDonnell Douglas wanted to sign a performance-based agreement with him instead of a buyout was because he wanted to sign a performance-based agreement with him.

The main reason is that the CEO is considering things from his own perspective and needs the company's financial statements to look good!

If $1 million is spent now, the financial report won't look so good.

As for the extra money that comes out later, it has nothing to do with him, because he can't be CEO forever.

This is a typical example of a professional manager who only cares about immediate gains and completely disregards the future. Of course, the other party also has sufficient reasons not to believe that this aircraft will be a bestseller.

Therefore, the performance-based agreement is not a problem.

“Mr. Li, our performance-based agreement is already excellent.”

"If cumulative sales are less than 1000 aircraft within 5 years, we will give $5000 million; if cumulative sales exceed 1000 aircraft within 5 years, we will give $1.2 million; if cumulative sales exceed 1500 aircraft within 5 years, we will give $1.5 million; and if sales exceed 3000 aircraft within 10 years, we will give $4 million," the president of McDonnell Douglas said.

Upon hearing this, Li Song chuckled and said, "3000 units sold will fetch $4 million!"

"Only $7.5 per aircraft."

"How about we just license the patent? We'll pay you for every one you sell."

“Based on a patent price of 5%, a medium-to-long-range narrow-body passenger aircraft would cost at least $1200 million, or at least $60,” Li Song chuckled.

"Mr. Li is joking!" The president of McDonnell Douglas shook his head.

"This performance-based agreement is too low."

"Within 5 years, cumulative sales will exceed 600 aircraft, requiring at least $2 million!"

“If these 600 aircraft are licensed at 5% of the patent, that would be $3.6 million, but I only ask for $2 million.”

"The subsequent performance-based agreements will all increase!"

"I know better than you how much profit a single airplane generates."

"How many aircraft has your company sold in total, exceeding 1000? How dare you offer such outrageous terms, 1000 aircraft sold in just 5 years?" Li Song chuckled and asked in return.

The president of McDonnell Douglas gave an awkward smile upon hearing this.

"Mr. Li, a 5% technology license is too high," was all the president of McDonnell Douglas could say.

"I don't care. Our aircraft company doesn't lack market demand in the short term, anyway, we currently have insufficient production capacity."

"If you're willing to just watch Boeing make money."

"Then let's all just watch."

"I believe that if things continue like this, your McDonnell Douglas company will be the first to go under."

"Actually, there are benefits to you selling the company to Boeing," Li Song replied nonchalantly.

The president of McDonnell Douglas looked uncomfortable upon hearing this.

McDonnell Douglas believed that its price was sufficient, as it was the only potential buyer for such a model.

However, the president of McDonnell Douglas could not refute what Li Song said.

A 5% patent technology licensing rate is indeed an international practice.

However, for an aircraft that costs tens of millions, a 5% percentage is too high.

The president of McDonnell Douglas had no confidence in the aircraft designed by his own design department.

Because their own design department simply made crude modifications to the existing design.

The reason Li Song refused the betting agreement was because it was too much of a loss.

Sales of 3000 units over 10 years are simply not achievable.

Moreover, even though McDonnell Douglas has now received the blueprints, the earliest they can launch the aircraft is next year.

It's hard to say what the political landscape will be like 10 years from now.

Moreover, in terms of aircraft sales alone, 3000 aircraft in 10 years is an astronomical figure. Although it seems like 3000 aircraft would bring in a lot of money, it is just a false target.

However, McDonnell Douglas's shareholders clearly had their own concerns. On the one hand, they worried that the new aircraft would not sell well, and on the other hand, they did not want to pay for it.

“I think your company can wait until Boeing’s financial report comes out next year before making a decision.” Li Song decided to put the matter aside for the time being and try to find Airbus again to see if they would be willing to buy it. After all, the Airbus A320 project was only initiated next year and then developed for a full six years, becoming the biggest competitor of the Boeing 737.

(End of this chapter)