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Credit report shows Meta keeping $27B off its books through advanced geometry

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Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#191

Post by loeg »

Aurornis wrote: post #101
illwrks wrote: post #70

Earlier quoted context omitted.

So… ‘vanity’ ratings… what’s the point of them then.

There are a lot of places where the credit ratings are hardcoded (to borrow a term) into funds. There are pension funds and other vehicles that might be bound to only invest in AA rated companies. So if a company drops their AA rating it could force them out of a lot of funds and investment vehicles. This complicated vehicle where the debt and assets are in another LLC isn’t actually tricking anyone in finance. If yo…

Is anyone actually limited to only AA+? The usual meaningful separation is investment grade (AAA, AA, A, and maybe BBB) vs junk (everything else). (I don't think Meta would meaningfully lose access to credit if they were downgraded to A.)

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#192

Post by mrandish »

swatcoder wrote: post #168
mrandish wrote: post #146

It would be deeply ironic if this data center (or similar ones using creative accounting), are among those featured in the TV commercials Meta has been running in expensive national prime time slots in recent weeks. I've seen at least two different commercials each focused entirely on the personal story of a relatable, folksy person living in a small town in a fly-over U.S. state, talking about how the town was decli…

I was sure you were exaggerating. But no! https://www.youtube.com/watch?v=xCVkA1xebrQ It turns out the one in this ad is in Altoona, Iowa. The ad focuses on how it revitalized the community by providing jobs, kind of glossing over how that might be reflected in the massive facility's ~30 car parking lot. And incidentally, that data center currently shows no open positions on Meta's career website, although third-part…

> I was sure you were exaggerating. But no!

What? Me exaggerate? Never! :-) I did actually spend a minute looking for the commercial on YouTube but YT search sucks, so thanks for finding it. Setting aside the fact it's crassly manipulative corporate propaganda, as someone with a lot of film and video production experience, the production team that made it did very nice work. That's the only reason I actually ever even saw it. I normally skip through all commercials on the DVR, but I happened land on a couple of really nicely shot frames as I was skipping and rewound to see the spot. I thought, "Wow, blatant bullshit but great work!" :-)

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#193

Post by hrimfaxi »

turtlesdown11 wrote: post #156
hrimfaxi wrote: post #111

Earlier quoted context omitted.

What's your point with this comment? How can we ever hope for another Bell Labs if we decry companies taking risks on things no one even asked for?

how could we ever deserve another juicero or quibi, right?

Do you really think the kinds of technology that are adjacent to or enablers for vr are on the same level as juicero?

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#194

Post by CPLX »

jfengel wrote: post #109
gruez wrote: post #92

Earlier quoted context omitted.

>Is Meta actually obligated to repay the loans or not? They aren't, but they're obligated to pay leases for it (they can't just build the datacenter and then walk away), which is kind of like having to repay the "loans".

I'm not an accountant, but "contractually obligated to pay" sounds like a debt to me. If the Generally Accepted Accounting Principles don't require that to manifest on the balance sheet, then it sounds like the principles aren't very good ones.

It’s not though. Signing a lease isn’t debt. If you rent an apartment you haven’t taken out a loan from your landlord.

Being conceptually similar isn’t the same thing as identical.

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#195

Post by tgsovlerkhgsel »

pas wrote: post #183
tgsovlerkhgsel wrote: post #176

Isn't the point that they intentionally glossed over ("We did not model what would happen if data center demand collapses and Meta cannot secure a new tenant. This scenario was excluded for methodological convenience.") a pretty important one? If I understand the explanations on HN, the complaint is that Meta is taking on debt, which would normally affect its credit rating, so they're "hiding" the debt in a LLC witho…

someone has to service the debt, and Meta has obligations to pay if the company cannot find any other tenant - if I understood correctly

My understanding is that the residual value guarantee only covers "most modeled cases" and this case (which might be the only one where the datacenter could not be meaningfully utilized and the guarantee would be relevant) was the not-modelled one...

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#196

Post by jcranmer »

turtlesdown11 wrote: post #158
rs186 wrote: post #61

Earlier quoted context omitted.

It is not the reader's fault if the article is unreadable in the first place. Not to mention that asking help to explain a text is extremely common. I can read English, but I have never read a US supreme court ruling. There are much better ways for me to understand those rulings to me as a non-lawyer.

> I can read English, but I have never read a US supreme court ruling. There are much better ways for me to understand those rulings to me as a non-lawyer. Having admitted to never having read a SCOTUS ruling, how can you then proclaim there are better ways for you to understand? How could you possibly make that assertion if you've never read a SCOTUS ruling?

> Having admitted to never having read a SCOTUS ruling, how can you then proclaim there are better ways for you to understand? How could you possibly make that assertion if you've never read a SCOTUS ruling?

A SCOTUS ruling is a primary source, and there's a pretty good universal rule that primary sources can be difficult to properly digest if you don't fully have the context of the source; for most people, reading a secondary source or a tertiary source will be a superior vehicle than the primary source for understanding. Although that said, some secondary and tertiary sources do end up being just utter garbage (a standard example is the university press release for any scientific paper--the actual merits of that paper is generally mangled to hell.)

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#197

Post by Slow_Hand »

mrandish wrote: post #192
swatcoder wrote: post #168

Earlier quoted context omitted.

I was sure you were exaggerating. But no! https://www.youtube.com/watch?v=xCVkA1xebrQ It turns out the one in this ad is in Altoona, Iowa. The ad focuses on how it revitalized the community by providing jobs, kind of glossing over how that might be reflected in the massive facility's ~30 car parking lot. And incidentally, that data center currently shows no open positions on Meta's career website, although third-part…

> I was sure you were exaggerating. But no! What? Me exaggerate? Never! :-) I did actually spend a minute looking for the commercial on YouTube but YT search sucks, so thanks for finding it. Setting aside the fact it's crassly manipulative corporate propaganda, as someone with a lot of film and video production experience, the production team that made it did very nice work. That's the only reason I actually ever eve…

I'm chuckling at the comments for the video:

"If you add two pounds of sugar to literally one ton of concrete it will ruin the concrete and make it unable to set properly which is good to know if you wanna resist something being built..."

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#198

Post by jrflowers »

tgsovlerkhgsel wrote: post #176

Isn't the point that they intentionally glossed over ("We did not model what would happen if data center demand collapses and Meta cannot secure a new tenant. This scenario was excluded for methodological convenience.") a pretty important one? If I understand the explanations on HN, the complaint is that Meta is taking on debt, which would normally affect its credit rating, so they're "hiding" the debt in a LLC witho…

>Isn't the point that they intentionally glossed over ("We did not model what would happen if data center demand collapses and Meta cannot secure a new tenant. This scenario was excluded for methodological convenience.") a pretty important one?

It is a joke. This is a humor post on a comedy blog. This substack is not actually a bond rating agency.

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#199

Post by csomar »

pas wrote: post #183
tgsovlerkhgsel wrote: post #176

Isn't the point that they intentionally glossed over ("We did not model what would happen if data center demand collapses and Meta cannot secure a new tenant. This scenario was excluded for methodological convenience.") a pretty important one? If I understand the explanations on HN, the complaint is that Meta is taking on debt, which would normally affect its credit rating, so they're "hiding" the debt in a LLC witho…

someone has to service the debt, and Meta has obligations to pay if the company cannot find any other tenant - if I understood correctly

How is this different from a 5-10 year lease? You can sell the car to someone (or the construct) and he continue to service the debt or you can service the debt.

Now that am thinking about it (not accountant) does a lease show as debt or not?

Re: Credit report shows Meta keeping $27B off its books through advanced geometry

#200

Post by caminante »

tgsovlerkhgsel wrote: post #195
pas wrote: post #183

Earlier quoted context omitted.

someone has to service the debt, and Meta has obligations to pay if the company cannot find any other tenant - if I understood correctly

My understanding is that the residual value guarantee only covers "most modeled cases" and this case (which might be the only one where the datacenter could not be meaningfully utilized and the guarantee would be relevant) was the not-modelled one...

All scenarios are modelled. It's not complicated.

The issue is the short, 4y renewal cycle, which allows Meta to attempt superficial arguments to avoid accounting consolidation for the variable interest entity that they...pretty much (a) control and (b) have skin in the game.

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