The Forgotten $450 Million Day

What actually happened

Electronic Data Systems had IPO'd in 1968 at a fantastic multiple and made Perot the symbol of the go-go years; the 1970 tech washout then took the stock down as fast as it had risen, and on April 22, ironically the day of the first Earth Day, Perot's stake collapsed by nearly half a billion dollars.

He didn't sell, didn't leverage, didn't explain himself to anyone. EDS's actual business, running data systems on long contracts, was fine, and in time the market agreed; General Motors bought EDS in 1984 for $2.5 billion, and Perot banked more than the paper he'd once 'lost.'

John Brooks made the day a chapter in The Go-Go Years; CNBC revisited it decades later with the same conclusion: the loss was real only if he'd made it real.

The longer arc

Perot built EDS from nothing, founding it in 1962 with $1,000 in savings after leaving a sales job at IBM, and grew it by processing Medicare and Medicaid claims for state governments, a captive, recession-resistant business that made the 1968 IPO possible and made Perot, briefly, one of the richest men in America on paper. That same paper fortune was what evaporated in a single trading session on April 22, 1970, without a single one of the underlying government contracts changing at all.

EDS's actual cash flow kept generating through the crash, and the stock recovered over the following decade. General Motors bought the company outright in 1984 for $2.5 billion and put Perot on its board, where he clashed publicly with chairman Roger Smith over GM's bureaucracy and slow pace; GM ended the fight in 1986 by paying Perot roughly $700 million to give up his stock, resign, and stop criticizing the company in public, a deal press coverage at the time likened to greenmail. Perot went on to found Perot Systems and run two independent presidential campaigns, in 1992 and 1996.