Thread

Amazon seeks to offload $8B of Nvidia chips to investors

80 points · 92 comments · wslh

cmiles8 · 1790953287 · focus · HN ↗
It’s starting… buckle up folks.
It’s a shame we won’t have Anthony Bourdain to explain this move to us in the AI implosion docu-flick that comes out in 2029. It’s not stale fish, it’s fish stew! It’s a whole new thing!
1. dannyw · 1790953724 · focus · HN ↗
  This looks just like financial engineering / creative accounting; to comply with things like GAAP rules and appearing less capex heavy, while functionally having the same effect.
  In the end, Amazon is still going to be the ones leasing and hence using the chips; nominally the 'owner' changes hands, and it looks like a bond (with a small equity component) in just about every way, except through some legal and accounting magic, it doesn't go on their balance sheet.
  1. Aurornis · 1790955202 · focus · HN ↗
    > except through some legal and accounting magic, it doesn't go on their balance sheet.
    This part is confusing a lot of people. This isn't a secret account trick that makes debt go 'poof' without any consequences.
    Companies have debts, assets, and liabilities. They can't keep the assets, move the debt to another vehicle, and do it all without incurring any liabilities.
    They move the GPU assets into the SPV. Their assets on the books are decreased.
    In return, they get funds they can use to pay down debts, buy more assets (more GPUs), or keep on the balance sheet.
    In the process, they incur liabilities because they have to continue paying the SPV to lease the GPUs.
    EDIT: Since it wasn't clear, debts are a subset of liabilities. They get the debt off the book, but they trade it for a liability because they are contractually obligated to continue paying to use those GPUs. This is why "keeping the debt off the books" isn't a dramatic game-changing reveal. They're still paying.
    Investors know this. Anyone who understands basic financial accounting knows this.
    A lot of the shallow reporting and comments avoid discussing these tradeoffs because it feels more scandalous that way. It's not unlike when we're discussing homeowners and someone interrupts to say "Well actually, don't you know, it's the bank who owns the home!" as if that completely changes the situation.
    ieie1 · 1790955493 · focus · HN ↗
    “ Companies have debts, assets, and liabilities.”
    Debt is a liability - putting it separate in the way you have signals your knowledge is probably mangled and you’re stepping way out of your domain of expertise.
    Happens here pretty often.
    Aurornis · 1790956747 · focus · HN ↗
    Debts are a subset of liabilities, yes. All debts are liabilities, but not all liabilities are debts. Understanding this is the point.
    Anyone who knows basic accounting will understand this. I'm trying to explain this in basic terms to an audience who isn't understanding these deals, not from smug drive-by comments like yours that attack people and add nothing to the conversation.
    The reason I separated debts out from liabilities is because a lot of these conversations are specifically talking about how this is a mechanism to keep debt, specifically, off the balance sheet.
    There are more types of liabilities than debts.
    Are you the same person who keeps creating throwaway accounts to attack comments on these posts? There's an awful lot of green text ad-hominem attacks happening in this thread. The other new account attacking my comments also has a name that looks like someone smashed the i and e keys on the keyboard: <a href="https://news.ycombinator.com/user?id=eiieke">https://news.ycombinator.com/user?id=eiieke

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