in2ebook Chapter 141 Sierra Mountain
Chapter 141 Sierra Mountain
The Sierra headquarters building looks a bit old, and the sign at the entrance is still the old style from before the 1994 acquisition, with some paint peeling off.
Ling Yun, Sophia, and Zhao Hu waited in the reception room for twenty minutes.
"Sorry to keep you waiting." The person who entered was a representative of CUC International, a man in his fifties wearing a dark suit named Carlson. Behind him was the current general manager of Sierra, a middle-aged man with a tired face.
"I am Carlson, Senior Vice President of International Mergers and Acquisitions at CUC, and this is Robert, General Manager of Sierra."
The atmosphere in the meeting room was somewhat somber.
"We've seen your letter of intent," Carlson said bluntly. "To acquire all of Sierra's assets, including the brand, IP library, and team. The offer of forty million US dollars is too low."
"As far as I know, Sierra lost eight million US dollars last year," Ling Yun said. "This year, the loss is expected to widen to ten million. Forty million US dollars has already taken into account the brand value."
Robert looked grim, but did not refute.
"Sierra is a legendary brand in the gaming industry," Carlson said. "King's Courier and the Space Mission series are classics. The value of these IPs alone is more than forty million."
"Classics are in the past." Ling Yun looked at Robert. "Your new works in the last three years, 'Fortress' and 'The Eye of the Beholder 2,' have all received ratings below 6 points. Sales are less than half of what we expected."
"That's temporary," Carlson raised his voice. "We're rebuilding the team, and a major release is coming next year."
"What masterpiece?"
"This..." Carlson was speechless.
Robert chimed in, "There are several projects in the early stages of development, but it's not convenient to disclose them at the moment."
Sofia took a report out of her briefcase.
"This is market research data. Sierra's brand awareness has declined by 40% in the past two years. Among gamers aged 15-25, awareness is only 12%. In comparison, Blizzard's is 68% and id Software's is 55%."
Carlson's face turned pale.
"These data are inaccurate."
"It's Nielsen's data," Sofia said calmly. "If you have more accurate data, we can discuss it."
silence.
Ling Yun broke the deadlock: "Forty million US dollars is the highest price we can offer."
Carlson and Robert exchanged glances.
"We need 60 million," Carlson said, "including debt assumption and employee resettlement."
"Impossible." Ling Yun stood up. "The negotiations end here."
"Wait a minute," Robert said hastily, "We can talk about it. Fifty million?"
"Forty-two million," Ling Yun said. "This is the final offer."
Carlson shook his head: "Too low, CUC won't accept it."
"Then forget it." Ling Yun gestured for Sophia to pack up the documents. "We have other options."
Seeing that the three were really about to leave, Carlson gritted his teeth.
"What if you only acquire Sierra Entertainment?"
Sierra Networks is the online gaming division of Sierra Entertainment. Founded in 1995, it currently operates several text-based MUD games with fewer than 100,000 users and annual losses of approximately two million US dollars.
"Snow Mountain Network?" Ling Yun stopped in his tracks.
"We can talk about it," Carlson said, "but the price won't be low. That team has experience and technical expertise."
How many do you want?
"Eighty thousand US dollars."
Ling Yun smiled.
How much revenue did Sierra Entertainment generate last year?
"...eight hundred thousand US dollars."
"What about the profit?"
"A loss of 1.9 million."
"Number of users?"
"Peak online users: 5,000".
"You want eight million for this kind of business?" Ling Yun shook his head. "One million, I'll think about it."
"One million?!" Carlson nearly jumped up. "You're kidding me!"
"No." Ling Yun walked back to the table. "Xueleshan Network is a money-losing business right now. If it weren't for that experienced team, I wouldn't want to invest a single penny."
"The team's value is worth far more than a million!"
"We can poach their team," Ling Yun said. "If I offer the engineers at XueLeShan Network double their salaries, will they come?"
Robert fell silent; the answer was yes. Sierra hadn't paid out bonuses for three months.
Carlson's face turned ashen.
"Two million," Ling Yun said. "And that's just for acquiring the team and existing projects, not including debt."
"That's impossible!"
"Then there's nothing more to discuss." Ling Yun turned around again. "Sophia, book our tickets for tonight. We're going back to Silicon Valley."
"Wait!" Carlson called out to him. "Five million. Including all assets, we'll take all the debts."
"Two and a half million." Ling Yun turned around. "This is the final price. If you agree, we'll sign the letter of intent; if not, we'll leave."
The meeting room was eerily quiet.
Robert looked at Carlson, his eyes saying: Sell it, at least you can cut your losses.
Carlson clenched his fist, his knuckles turning white.
A long half minute.
"...Deal." Carlson's voice sounded like it was being squeezed out from between his teeth.
Sofia immediately produced a prepared letter of intent with simple terms: icecloud would acquire all of Snow Mountain Network's assets, including its team, code, and user data, for $2.5 million, with CUC assuming all existing debts, and the transaction to be completed within 30 days of signing.
Carlson signed the document, his hand trembling.
Robert signed as well, and seemed relieved.
During the handshake, Carlson said, "I hope the Sierra Network can deliver value."
"Value is created by people," Ling Yun said. "Perhaps it will be different in our hands."
I left the Sierra Leone building and got into the car.
Zhao Hu drove, while Sophia organized the documents.
"Mr. Ling, is it worthwhile to buy this team for 2.5 million?"
"It's a good deal," Ling Yun said. "Snow Mountain Network has thirty engineers, most of whom have more than five years of experience in online game development. Their self-written game server framework can support tens of thousands of people online at the same time. It would take us two years and cost more than 2.5 million to develop this technology ourselves."
"But they're making text-based MUDs, which are outdated."
"The technology won't be outdated," Ling Yun said. "Integrate them into the alien company and develop graphical online games. Next year, once the Star System is widespread, launch an online battle platform."
Sofia understood.
"Like Blizzard's Battle.net?"
"Yes, but it's more open. It allows all games to connect." Ling Yun looked out the window. "The operating system plus the online platform makes it a complete ecosystem."
The car headed towards the airport.
"It's a pity we couldn't buy the IP address for Sierra's headquarters," Sofia said.
"It's not a pity," Ling Yun said. "Those old IPs have limited value; what's truly valuable is the team and the technology. Besides, we avoided a huge pitfall."
"What kind of pit?"
"CUC's financial problems," Ling Yun said. "I've investigated. CUC expanded too quickly in multiple areas, leading to a tight cash flow. They sold Sierra Networks as an emergency measure. If we buy the entire Sierra, we'll have to take on all the debt and employees; that's a bottomless pit."
"So you never intended to buy the whole company in the first place?"
"I thought about it, but seeing their asking price and attitude, I knew we couldn't reach an agreement," Ling Yun said. "We should focus on our goals and secure the parts that are most useful to us."
We've arrived at the airport. Our flight to North Carolina will take off in three hours.
Next stop, Epic MegaGames.
While waiting for the flight, Lingyun called Alex.
"We are preparing to take over a team from Sierra Networks, about thirty people. We need to arrange office space, computers, and accommodation."
"When will you arrive?"
"Next week. I'll have Sofia take over."
"Okay. Also, the first meeting of the UHSB standards organization has been scheduled for April 15th. Dell, HP, and Compaq will all send representatives."
I will participate.
After hanging up the phone, Lingyun said to Sophia, "We need to adjust our strategy regarding the Epic negotiations."
"How do I adjust it?"
"First, we'll talk about acquisition. If he doesn't agree, then we'll talk about equity investment. If he still doesn't agree," Lingyun said, "we'll invest in their Unreal Engine development and license them a deep optimization license for the Starry Sky system."
"What about a minimum guarantee?"
"No guaranteed minimum," Ling Yun said. "We'll invest two million US dollars directly, taking 20% of the project's profits. If the game makes money, we'll share the profits. If the game loses money, we'll accept the loss."
"The risk is very high."
"But we showed even more sincerity," Ling Yun said. "Epic is a technology-driven company, and we demonstrated our respect for technology, which made them willing to cooperate."
Sofia wrote it down.