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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

#211

Post by cyanydeez »

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…

One of the reasons these things are getting financed is the belief that the purchased hardware wont depreciate significantly. Which is bizarre when you think about the hardware production latter.

For these datacenters to keep value without the computational demand, you also assume new hardware prices & capability will stagnate.

I still dont see the "total addressable market" being large enough to satisfy even one monopoly.

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

#212

Post by antonkochubey »

cyanydeez wrote: post #211
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…

One of the reasons these things are getting financed is the belief that the purchased hardware wont depreciate significantly. Which is bizarre when you think about the hardware production latter. For these datacenters to keep value without the computational demand, you also assume new hardware prices & capability will stagnate. I still dont see the "total addressable market" being large enough to satisfy even one mon…

>you also assume new hardware prices & capability will stagnate

Well shall I break the bad news to you.. for the past few years this is starting to look more and more true, for server hardware at least (CPUs, DRAM, SSDs). Sure, you can get more (cores, GB of DRAM, TB of NAND) now in a same package, but also at a higher cost.

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

#213

Post by jrflowers »

caminante wrote: post #210
jrflowers wrote: post #198

Earlier quoted context omitted.

>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.

It's not good humor though. This blog is in the "no man's land" of satire v. serious. Doesn't pick a lane and people get confused, but it's not funny, "bit the onion" confused.

I sent it to my friend that works in corporate accounting and she thought the post was hilarious, so I guess the intended audience is pretty narrow? ¯\_(ツ)_/¯

That aside, I don’t think that this post by a made up bond rating agency called the Flexible Standards Group that uses phrases like “unbothered by reality” “downgrade when the shit hits the fan” is particularly difficult to parse as being humor (or at the very least not an actual bond rating)

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

#214

Post by caminante »

jrflowers wrote: post #213
caminante wrote: post #210

Earlier quoted context omitted.

It's not good humor though. This blog is in the "no man's land" of satire v. serious. Doesn't pick a lane and people get confused, but it's not funny, "bit the onion" confused.

I sent it to my friend that works in corporate accounting and she thought the post was hilarious, so I guess the intended audience is pretty narrow? ¯\_(ツ)_/¯ That aside, I don’t think that this post by a made up bond rating agency called the Flexible Standards Group that uses phrases like “unbothered by reality” “downgrade when the shit hits the fan” is particularly difficult to parse as being humor (or at the very…

Look at all of the critical parsing here on HN of nonsensical premises, e.g., "we skipped model scenarios of default".

It also has an eerie tinge of AI generated satire wrapping a real article.

Can't have nice things anymore...

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

#215

Post by fsckboy »

exacube wrote: post #8

[flagged]

>The accounting rules say you only have to put an entity on your balance sheet if you “control” it and take on most of the risk/benefit.

Meta is a publicly traded company. If they have an agreement wherein they may have to pay substantial amounts to another company or on behalf of another company, that's a liability and they need to disclose that. Whether it's on their balance sheet doesn't really matter, this is what analysts do, back out these types of financial arrangements from the footnotes and publish thumbs up or thumbs down. People like to say "do your own research" but people should not, in general, do their own research.

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

#216

Post by selimthegrim »

xrd wrote: post #174
selimthegrim wrote: post #49

Earlier quoted context omitted.

This is hilarious because I was at the Louisiana public utility commission meeting where the argument was basically it’s Meta borrowing the money so they’re good for it.

Please do say more about this!

What do you want to know? There’s a YouTube of the session.

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

#217

Post by cyanydeez »

antonkochubey wrote: post #212
cyanydeez wrote: post #211

Earlier quoted context omitted.

One of the reasons these things are getting financed is the belief that the purchased hardware wont depreciate significantly. Which is bizarre when you think about the hardware production latter. For these datacenters to keep value without the computational demand, you also assume new hardware prices & capability will stagnate. I still dont see the "total addressable market" being large enough to satisfy even one mon…

>you also assume new hardware prices & capability will stagnate Well shall I break the bad news to you.. for the past few years this is starting to look more and more true, for server hardware at least (CPUs, DRAM, SSDs). Sure, you can get more (cores, GB of DRAM, TB of NAND) now in a same package, but also at a higher cost.

So your evidence -is- the bubble.

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

#218

Post by pas »

caminante wrote: post #210
jrflowers wrote: post #198

Earlier quoted context omitted.

>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.

It's not good humor though. This blog is in the "no man's land" of satire v. serious. Doesn't pick a lane and people get confused, but it's not funny, "bit the onion" confused.

Poe's law applies, it's deadpan humor, finance Borat

IMHO it is very well executed, pushes the right buttons, and ultimately raises the question of financial realism (if the market acts like it's true is it true? how far is it from something that you can use to pay your taxes with? and so on)

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

#219

Post by pas »

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...

https://www.spglobal.com/ratings/en/regulatory/article/-/vie...

this is the original report

https://longbridge.com/en/news/265411465?channel=WHAB0001

> This arrangement comes at a steep price. The interest rate on these bonds is as high as 6.58%, significantly above the 5.5% yield of bonds from similar companies to Meta.

so it's definitely not completely junk, but the market priced in the gap (though, for me, it doesn't seem that big of a price difference!)

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

#220

Post by pardon_me »

michaelt wrote: post #169
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…

> Meta built a new data center nearby and this person along with many others got jobs there and now things are great. Creating such bustling workplaces as https://maps.app.goo.gl/fc9AGtsVwiLA1vd88 https://maps.app.goo.gl/fHvTWK4rWqrsqsmr9 https://maps.app.goo.gl/RzggPfd3xbBQbdoo6 and https://maps.app.goo.gl/MBjun6ad4zJmmrRV7 These facilities will sometimes employ as many as 100 people - so a state that can attract th…

Most will be specialist jobs too, with people moving there to fill them and/or working on a rotating basis, requiring traveling. Truly magnificent for the community, and the environment--employees can bring bottled water with them from out of state to solve that issue!
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