Simon made no attempt to keep things under wraps, so by that afternoon, news that the Victoria's Secret Fashion Show would be discontinued spread quickly. Initially, it was dismissed as fake news. However, when some insiders received confirmation from people at the morning meeting, the media erupted.
Major online platforms immediately pushed the story to the top of their news feeds.
Without an official announcement, some early reports contained errors, assuming that the fifth Victoria's Secret Fashion Show itself would be canceled. Although this was soon clarified, many still found it hard to believe.
After all, this was a mega-show, drawing millions of viewers and known as the "Super Bowl of fashion"! Even if we set aside the substantial market gains the show has brought Victoria's Secret in recent years, the show itself has consistently sold millions in video recordings, generating hundreds of millions of dollars in revenue.
People wondered if Simon Westeros had lost his mind to stop it all so suddenly.
Starting Saturday afternoon, not only were all executives associated with Victoria's Secret and LTD Group probing for answers, but even Simon received a barrage of calls inquiring about it. Later that night, at the East Coast management party for Daenerys Entertainment, Robert Iger and others eyed Simon suspiciously, wondering if recent pressures had somehow affected his judgment.
By the next day, traditional media joined the discussion, making the situation even more intense.
Cersei Capital's Apollo Management, as the largest shareholder in Victoria's Secret's parent company LTD Group, faced the heat.
Apollo Management had originally acquired LTD Group for $2.45 billion in cash. Following standard private equity practices, the plan was to hold the asset for about five years, take it public again, and then cash out. The acquisition was completed in 1992, making next year the five-year mark.
As a result, LTD Group had already started preparing for a relisting.
With Simon's sudden announcement that the Victoria's Secret Fashion Show would cease after this year, or at least be temporarily paused, the IPO plans would inevitably be impacted. The show has undeniably been a major driver of LTD's success.
When Apollo's head Leon Black urgently sought clarification, Simon patiently explained his rationale.
Simon had contemplated halting the fashion show from the very beginning. He didn't want Victoria's Secret to become overly dependent on it, nor did he want LTD Group as a whole to be entirely overshadowed by the brand's success. In recent years, another LTD brand, the fast-fashion line Express, had also been growing rapidly but was often overshadowed by Victoria's Secret.
In short, Simon wanted the company to pause, rethink its product and marketing strategies, and adopt a more measured approach to future expansion.
Primarily, this meant international expansion.
Because the fashion show was so eye-catching, everyone had been captivated by its allure, ignoring some of the company's underlying issues. As in the past, once the show is stopped, any issues that have been piling up tend to surface quickly, almost pushing the company toward decline.
On the other hand, even without the show, LTD's rapid growth in recent years, combined with the current booming stock market, could still enable it to reach a valuation of around $10 billion with next year's IPO.
From the initial $2.45 billion acquisition to a potential $10 billion valuation in five years, averaging over 60% in annual returns, this would be a fantastic outcome for investors. As a successful private equity project, Apollo would not need to sell everything at once. They could continue to benefit from LTD's future growth.
Furthermore, announcing the show's suspension now, rather than after the IPO, would mitigate potential lawsuits. Given the show's immense influence, announcing a halt after the IPO would likely cause the stock price to plummet and could even lead investors to accuse the Westeros system of maliciously manipulating LTD's stock price, resulting in a class-action lawsuit. With LTD still private, this issue could be avoided.
Leon Black couldn't fully agree with Simon's reasoning, yet he had no grounds to argue. Simon's plan was clearly for LTD's long-term benefit, while private equity often seeks to maximize short-term returns. There was an inherent conflict of interest.
However, Simon was the ultimate decision-maker here.
The boss's word was final.
Meanwhile, the modeling world was in dismay. Much like the shock felt by the supermodels when they first heard the news, many models wondered how they'd manage to achieve stardom without the exposure the Victoria's Secret show provided. But, as the lowest rung in this hierarchy, these models had no say in the matter.
If Simon were not at the pinnacle of the Westeros system but simply a high-level executive at Victoria's Secret, it wouldn't be surprising if the models, who are known to be rather unyielding, had already organized some form of protest. In the original timeline, Victoria's Secret went twenty years in the spotlight with no trouble; as soon as the show was halted, accusations of harassment and discrimination emerged.
Joint letters.
Sexual harassment lawsuits.
Accusations of various biases within Victoria's Secret.
And with the brand's declining performance, the negative publicity only accelerated its fall.
But in this case, that wouldn't happen.
Regardless of others' reactions, Simon had no intention of changing his mind once he'd made a decision.
After spending the weekend in New York, Simon departed for London on Sunday afternoon for a week-long European trip.
The primary agenda was to promote a series of bond offerings by the Westeros system planned for later in the year. Investment banks responsible for the bond issue, including Goldman Sachs, wanted Simon to attend a few of these events in person.
Simon arrived in London on Monday, July 15. On the same day, Egret Corporation released its semi-annual report for 1996.
Ever since Egret's revenue passed the $10 billion mark, its growth rate had inevitably slowed. Given its scale, it was unrealistic to expect the same rapid doubling of revenue as in its early years. For example, Egret's annual revenue for 1995 grew by 78%. This year, industry analysts projected a reduction to around 50%.
The market, however, underestimated the momentum of the tech sector.
In the first half of 1996, Egret's combined revenue for the first two quarters reached $13.91 billion, marking a 61% year-over-year increase, surpassing the industry's expectations of around 50%. Furthermore, due to the high gross margins on many of Egret's services, even with substantial reinvestment into business growth, its net profit margin reached 11.9%, resulting in an impressive net profit of $1.655 billion.
Revenue of $13.91 billion and net profit of $1.655 billion in just half a year—these figures were comparable to what many tech giants in Simon's memory achieved only a decade later. In 1996, most internet companies hadn't even established sustainable business models.
But Egret's success was tangible.
The US's internet infrastructure had been built in the '70s and '80s, and with Simon's foresight, he had dedicated the Westeros system's resources to accelerating the industry by at least five years, introducing a series of mature business models from the start.
Egret also controlled essential software tools with near-monopoly advantages, effectively acting as a toll bridge with no competition, a business model Warren Buffett would appreciate.
As a result, Egret's software, web portals, search engines, social networks, e-commerce, app stores, game platforms, cloud computing, and other services, though in their early stages, combined to create a company with the potential to encompass several tech giants.
In short, compared to the many tech companies still burning cash to sell their visions, Egret had already left all potential competitors in the dust.
To put it plainly, Egret's only real competitor was itself.
According to Simon's long-term plan, the company would eventually be broken up, leading to a corporate shakeup far more dramatic than the AT&T split. AT&T, despite its scale, was worth less than $100 billion at the time of its breakup.
Egret, on the other hand, was destined to become a trillion-dollar powerhouse.
On July 15, Egret's outstanding revenue and profit figures pushed its stock price up significantly.
On Monday alone, Egret's stock rose by 3.6%. A 3% increase might seem modest for other companies, but for Egret, which was approaching a $400 billion valuation, this meant crossing the $400 billion threshold. By the end of the trading day, Egret's market cap had reached $410.3 billion.
In just one day, the total stock value of Egret's shareholders had increased by $14.7 billion due to that 3.6% gain.
At Egret's scale, $14.7 billion might seem small, but this increase alone exceeded the total market cap of over 90% of American companies. Egret's valuation had become staggering.
Like the FAANG giants that would later dominate Wall Street with trillion-dollar valuations, Egret was soaring while most companies could only dream of breaking $10 billion or $100 billion.
With Egret leading the way, July 15 also saw stock gains for Cisco, AOL, Microsoft, Intel, Tinkerbell, Oracle, and others. In fact, some analysts predicted that by the end of July, the NASDAQ Composite Index could hit 5,000 points.
A 5,000-point mark that, in Simon's recollection, was only reached around 2000.
If this milestone were reached by July, it could very well lead to a pre-election tech bubble burst by November.
In reality, though, it was not that simple.
Egret's results were indeed above expectations, but good news for some spelled trouble for others. Egret's stellar performance didn't mean that every tech company was thriving.
Also, in July, aside from Cisco's continued growth
driven by global demand for networking equipment, another Westeros system giant, America Online (AOL), showed signs of slowing growth as the US internet market approached saturation. At least domestically, AOL's performance clearly began to taper off.
Consequently, AOL's mid-year report fell short of expectations.
Additionally, despite the tech sector's overall exuberance, the high saturation and slower growth in AOL's primary markets suggested a potentially unsustainable expansion.
The capital markets saw this trend as a need for AOL to diversify and focus more on international expansion.
The direction was clear.
The Clinton administration's Telecommunications Act had removed restrictions between telecom sectors. AOL should now consider branching into fixed-line and cable television, while also expanding internationally.
Although AOL had made significant strides in international expansion, its efforts to diversify were seen as sluggish by investors.
The most immediate effect was on its stock price.
Among the three Westeros tech giants, AOL had the smallest market cap, and this gap had recently widened.
On July 15, Egret led with a market cap of $410.3 billion, followed by Cisco at $375.6 billion, and AOL at $269.7 billion—a difference of nearly $100 billion between AOL and the other two giants.
Outside the big three, other tech players saw similar growth.
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