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Chapter 536 Unexpected Disaster

"I don't quite understand." Ernst shook his head, not understanding what the other person meant or where the misunderstanding came from.

Armstrong sat in the leather chair beside him, his fingertips tapping lightly on the smooth leather surface, rhythmically but silently.

He gazed at Ernst, his deep eyes displaying a complex mix of emotions—resentment, helplessness, regret, but mostly admiration.

After a moment of silence, he finally spoke, uttering a name in a low voice: "Bell Labs."

Ernst abruptly raised his head, looked at Armstrong, and his pupils contracted slightly.

In an instant, the many fragments in my mind were connected as if by invisible threads, forming a clear logical chain. Many questions that I had been unable to understand before suddenly became clear.

Why didn't he call Armstrong, but instead went directly to the Telephone & Telegraph Corporation headquarters?

From the moment the news broke, the whole thing had an indescribable eeriness about it.

First of all, it's abnormal that the TT Corporation didn't call him.

According to industry practice, when an incident that may cause rifts between the parties escalates, the parties involved should communicate as soon as possible to eliminate potential misunderstandings and suspicions.

He would definitely suspect, even be certain, that there was a problem on the telephone and telegraph company's side. The telephone and telegraph company couldn't possibly be unaware of this, much less have failed to anticipate Ernst's suspicions. Normally, shouldn't Armstrong have proactively called Ernst to explain and clear up the misunderstanding?

After all, the interests of both parties are the same, and open and honest cooperation is beneficial to both.

But the reality was quite the opposite. From the time CNN reported on China Telecom to Ernst's arrival at the Telephone and Telegraph Corporation, an hour had passed, and his personal cell phone had not rung.

AT&T not only failed to contact him, but also failed to issue any form of clarification statement to the outside world, allowing public opinion to ferment, as if the direction of this storm was exactly what they hoped to see.

As Armstrong uttered the words "Bell Labs," Ernst fully understood that this was a tacit collaboration between AT&T and Lucent Technologies, intended to give him a warning.

Tell him never to provoke them or scheme against them.

He traded 49% of China Telecom's shares for Bell Labs. Both AT&T and Lucent were very supportive of this, and some of their internal shareholders even considered it a victory for AT&T and Lucent.

This huge money-burning machine requires billions of dollars in R&D investment every year, yet it is difficult to convert it into substantial commercial returns.

For AT&T and Lucent, who are eager to divest non-core assets and focus on their main businesses, being able to get rid of this burden to Ernst and at the same time acquire a huge stake in China Telecom is undoubtedly a sure-fire deal.

They not only escaped the constant financial pressure, but also acquired a profitable and lucrative business, and expanded their operations through transactions.

Moreover, after the sale of Bell Labs, Lucent's investment decreased while its profits increased dramatically, as evidenced by its current stock price, making it a win-win situation.

But no one expected that the situation would take such a dramatic turn in just a few months. Now it seems like they bought a bad deal.

Ernst not only prevented Bell Labs from declining, but also revived this cumbersome technological giant with his unique business acumen.

Bell Labs was not only not a burden, but in Ernst's hands it became a chicken-making machine.

Starlight Technology, a startup that used laser technology discarded by Bell Labs, has managed to become a multi-million dollar annual business.

Now, in key cities on the East and West Coasts such as New York, Los Angeles, and Miami, Starlight Technology's laser lighting equipment has become standard equipment in high-end hotels, private clubs, and top nightclubs, with orders piling up.

In many places, Starlight Technology's lighting equipment has even become a major selling point.

Those reporters were like sharks smelling blood; they immediately saw the news value behind it.

Once people learn about Starlight Technology and that its technology comes from Bell Labs, its news value increases even more.

Although the actual situation was that China Telecom exchanged shares for ownership of Bell Labs, in order to prevent China Telecom from being exposed, it was officially announced at the time that Ernst had acquired Bell Labs.

Many media outlets at the time felt that Ernst had made a losing proposition regarding Bell Labs, a bottomless pit.

After all, Bell Labs' annual R&D investment is astronomical, and Ernst acquired it as an individual rather than a company, which is indeed a bit overestimating his abilities. Some media outlets even believe that he will be dragged down by this bottomless pit sooner or later.

However, the fact that a mere obsolete laser technology has spawned a company like Starlight Technology and created such significant market value forces everyone to re-evaluate the true value of Bell Labs. If an obsolete technology can have such enormous commercial potential, what about the other obsolete technologies in the lab?

What kind of commercial potential and how much wealth will those cutting-edge technologies that have not yet been made public and are still under development contain?

Will more companies like Starlight Technology emerge from Bell Labs' technological reserves in the future?

If this is true, and Bell Labs' technology is brought to greater commercialization, wouldn't Ernst have once again demonstrated remarkable foresight and turned ordinary technology into gold?

He is the victor, so who is the loser?

These media outlets perfectly demonstrated what it means to have a thick skin; they completely forgot how they slandered Bell Labs and thought Lucent should shut down this huge burden.

It licked the dog poop off its face and got a new skin.

So now the Telephone and Telegraph Corporation and Lucent feel they've been cheated and that they've been tricked, so they're using this incident as a kind of warning.

At the same time, by hyping up this dedicated line and soaring its stock price, they can recoup some of their losses.

"No," Ernst shook his head again. "Why WorldCom?"

Armstrong hadn't expected Ernst to be so serious, and said with a wry smile, "I told you, this was an accident."

Then he realized what was happening and looked at Ernst curiously. "You don't really believe in the split conspiracy theory, do you?" Ernst frowned slightly, a hint of confusion flashing in his eyes.

Is not it?

The biggest driving force behind the breakup of AT&T was WorldCom.

It was this ambitious emerging telecommunications company that, through lobbying Congress and funding think tanks, propelled the sensational antitrust legislation process, ultimately forcing the telecommunications giant AT&T to break up and reorganize.

However, at the same time, a completely different story was circulating in American business circles: the anti-monopoly campaign that seemed to be led by WorldCom was actually a farce orchestrated by AT&T itself.

More accurately, it was a capital game meticulously orchestrated by the Wall Street shareholders behind AT&T.

As the world's largest telecommunications company at the time, AT&T could not voluntarily split itself up, and even if it had such an idea, it could not do it.

Thus, Worldcom came into being, becoming the most crucial piece in this game.

There are two main reasons for this claim.

One reason is the high degree of overlap between the Wall Street shareholders behind AT&T and WorldCom, with many investment banks holding significant stakes in both companies.

Wall Street didn't want the then-monopolistic telephone and telegraph group to be broken up, and WorldCom couldn't possibly hold on to it.

Another piece of evidence is that after the breakup, the stock prices of AT&T's various subsidiaries rose sharply in the short term, resulting in huge capital gains for shareholders. WorldCom also seized this opportunity to rise rapidly, becoming a rising star in the telecommunications industry. "The breakup of AT&T was essentially a carefully planned conspiracy by WorldCom for its own development," Armstrong's voice interrupted Ernst's thoughts. "As for those financial giants on Wall Street, they only saw the profits behind it and chose to remain neutral, or rather, stand by and reap the benefits."

"Then Shitong..." Ernst wanted to ask, if that's the case, how did Shitong obtain those detailed data about mainland telecommunications and the cooperation between the two sides?

"Navins Cohen, he's now the COO of WorldCom and also a member of the company's special committees," Armstrong replied.

"The anger of the losers?" Ernst asked with a bitter smile. He never expected that this upheaval that had shaken the entire telecommunications and financial industries was actually caused by a power struggle within AT&T.

As for myself, I was caught in the crossfire.

Navins Cohen, Ernst vaguely remembered this person.

He recalled that the last time he visited AT&T headquarters, he was one of the vice presidents of the Telephone and Telegraph Group.

This position may seem prestigious and powerful, but within large corporations, the number of vice presidents is likely very small, and only a handful of people can actually enter the core management team and participate in decision-making.

To put it bluntly, he couldn't even sit at the table that symbolized power when eating.

But WorldCom's CEO and a member of the special committee is a completely different matter.

In the corporate governance structure of the United States, the CEO is usually regarded as the first in line to succeed the CE, responsible for the company's day-to-day operations and management, with power second only to the CEO.

The members of the special committee also hold a privileged position. In the United States, almost every publicly traded company has established a special committee; it's standard practice.

An audit committee is established to oversee financial reporting.

The Compensation Committee sets executive salaries.

The nomination committee recommends candidates for director.

And each of these positions is basically dominated by independent directors.

Navins's appointment as a member of WorldCom's C and special committees not only signifies his successful entry into WorldCom's core management team, but also represents his becoming one of the company's independent directors.

C's position as an independent director is undoubtedly two very important assets for him when he takes the helm of WorldCom in the future.

"It seems someone doesn't want me to have this piece of the pie in peace." Ernst knew this day would come; from the day Continental Telecom was founded, he had been eyeing the telecommunications industry's pie.

But he hopes to resolve the issues on Wall Street and online payments before addressing the telecommunications problems.

It now appears that we are besieged on all sides.

Moreover, he cannot strongly retaliate, as the telecommunications industry is not currently part of his strategic plan.