America's No. 1 financial conglomerate

Chapter 542 Breaking Point

"There are undercurrents outside, but you seem completely unconcerned, not worried at all."

In the conference room of Ernst Asset Management, Jane Fraser was curious and puzzled, wondering why Ernst was so calm, as if nothing had anything to do with him.

"Will being anxious solve the problem?" Ernst put down the documents he was looking at, a faint smile playing on his lips, and slowly raised his head to look at the other person. "If anxiety and irritability can resolve a crisis, reverse the situation, and solve the problem, I don't mind being gloomy for a few days."

His slightly teasing remark startled Jane Fraser at first, but she couldn't help but chuckle.

This is why she trusted Ernst and was willing to follow him wholeheartedly.

No matter what adversity he faced, this man always maintained a clear mind and a calm demeanor, as if everything was under his control.

And it wasn't just her; almost everyone at Ernst Asset Management, from top executives to ordinary employees, had an almost religious level of trust in Ernst.

As Ernst Asset Management's business flourished and its development improved, it naturally attracted the attention of Wall Street giants.

Not only her, but all the managers of Ernst Asset Management have been poached by Wall Street.

Although from the perspective of job equality, joining those Wall Street giants is a decline in position.

However, from a future career perspective, joining a Wall Street giant represents a step up in one's career path. Working at Ernst Asset Management, their chances of promotion are slim for most of their careers.

If the leaders above don't move up, there's no chance of promotion.

But joining those Wall Street giants is different; they will have a lot of room to climb.

Even at the same level, both being CEOs, the social influence and industry authority of someone working at a century-old financial giant like Goldman Sachs or Citigroup are absolutely different.

However, all the management teams recruited by Ernst Asset Management rejected these offers without hesitation, a situation that left Wall Street giants baffled and incredulous.

They couldn't understand why these people would turn down the offers from these giants and choose to stay with a startup.

This must have been partly due to Ernst's generosity. The finance department had already made a bonus plan, with Jane Fraser receiving a bonus of $3300 million. The entire Ernst Asset Management company had also distributed a huge amount of $2.5 million in rewards.

It covered all employees; even the cleaning lady was given a symbolic bonus of one thousand US dollars.

They are not like John Thornton, the head of Goldman Sachs Asia, who earns so much money. One reason is that Goldman Sachs really made a fortune during the Asian financial crisis, and another reason is that he has stock options.

The dividends of over 70 million are not worth the bonus alone.

Judging from the profit distribution, Ernst distributed 20% of the profits Ernst Asset Management Company had made over the past year, which is incredibly generous.

Besides his generosity, there's also power. Joining those Wall Street giants would never give you as much power as you do here, not to mention the endless bureaucratic hurdles above you.

They are also subject to multiple levels of constraints, and any decision requires a lengthy approval process and must adhere to strict internal rules and regulations.

But it's different here; they are the top two leaders in the department and only need to report to Jane Fraser.

Jane Fraser, on the other hand, was more managerial, and most of the time all financial operations were carried out according to their will.

But the most important factor is Ernst himself, his confidence, his air of being in complete control, and his legendary undefeated record.

All of these factors combined make one feel that Ernst Asset Management has a bright future.

Perhaps Ernst Asset Management will not reach the same level as Goldman Sachs, Citigroup, or Lehman Brothers.

However, they believe that Ernst Asset Management will inevitably have a place on Wall Street in the future.

At that time, their positions, influence, and industry status will be no less than those of the top executives of Wall Street giants.

Even among the traditional giants on Wall Street, those who rise to the top are merely pawns in a vast system.

At Ernst Asset Management, they have the opportunity to participate in the creation of an industry giant, to become the builders of a behemoth, and to go down in history.

Ultimately, it all comes down to profit. When that day comes, the equity they acquire will bring them a net worth that will far surpass that of Goldman Sachs' partners and management.

"Do you have something on your mind?" Jane Fraser asked, still somewhat curious after laughing.

"Thoughts?" Ernst fell silent.

There are many ideas, and breaking the deadlock in the telecommunications industry is quite simple, but he can't do it that way.

He knew better than anyone how WorldCom became an American telecommunications giant in just ten years.

WorldCom's development is a classic American mergers and acquisitions story. Through a series of acquisitions of various large and small telecommunications companies, it expanded its business, transforming WorldCom from a small company confined to one state of Calami into a telecommunications giant with business covering the northeastern United States, southern Canada, and parts of Europe.

By driving up stock prices through acquisitions and using high-priced WorldCom stock to acquire competitors, WorldCom could eliminate its rivals one by one without needing large amounts of cash or operating with high debt.

However, there is a prerequisite: that investors and shareholders of the acquired companies have absolute confidence, or even fanaticism, in WorldCom's stock.

Only in this way would they be willing to forgo all cash and allow WorldCom to acquire their company entirely through a stock swap.

How to get the shareholders of the acquired companies to be enthusiastic about WorldCom?

The stock price will inevitably rise.

The most direct indicator of a rising stock price is financial revenue. WorldCom's acquisitions were all premium acquisitions.

This is especially true of MCI, which was recently acquired by a large corporation.

MCI was about to reach an agreement with the British telecommunications company when WorldCom suddenly intervened, offering more than double the price offered by the British telecommunications company.

With such an acquisition, WorldCom's revenue will not meet forecasts.

But WorldCom has a knack for turning the impossible into reality, and its revenue always exceeds expectations.

Ernst knew what was so mysterious about WorldCom: the infamous WorldCom accounting fraud had already begun.

He even knew how WorldCom falsified its data: by confusing expenses with capital expenditures.

WorldCom improperly included a large amount of routine operating expenses related to the expansion of its telecommunications systems in its capital expenditures.

According to accounting standards, operating expenses should be included in current period costs to reduce profits, while capital expenditures can be depreciated and amortized over many years.

To put it simply, my cost of goods purchased this month is not included in the cost of expenses, but is calculated in installments.

Naturally, this month's profits will increase dramatically.

If this were reported, WorldCom would inevitably go bankrupt, and Ernst could use it to intimidate the entire telecommunications industry. Every company has its share of irregularities; none are clean, everyone has something to hide, including Ernst's company.

If we include all listed companies worldwide, killing them one by one might result in wrongful executions. But by executing them one by one, we can ensure that every investigation is accurate and there will be no exceptions.

The only exception is the issue of how much or how little poop there is.

But Ernst couldn't expose WorldCom; the Nasdaq bubble was the main story, and everything else had to give way to it.

"That's you."

Jane Fraser was momentarily taken aback, especially since it was the famous American playboy who was saying such slightly ambiguous things to her.

"You mean the key to victory lies with Ernst Asset Management?"

"I suppose so," Ernst replied.

In fact, there are a few ways he could break the deadlock, but Ernst Asset Management is the most suitable.

So he's betting his chips here, wanting to take down Wall Street first and get mainland telecommunications up and running before making any further moves.

As for the attempts to contain the telecommunications industry, he has no plans to develop the telecommunications industry anyway, so if you want to block it, go ahead and block it.

"What is it?" Jane Fraser asked curiously.