[object Object]@panda_abyss@lemmy.ca
edited

Replying to @⁨HaraldvonBlauzahn@feddit.org⁩

Probably related to the now three Oracle data center that can’t get electricity.

Wisconsin passed a law that fast tracking large projects requires a high credit rating or collateral, to pay secure costs for building the power plants needed for the data center. In July Oracle’s debt rating was downgraded to near junk levels.

That means Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight. Thats putting even further downward pressure on their credit rating and ability to secure loans to meet their $500B in obligations.

Now Oracle’s New Mexico data center is stuck due to contract issues with water and gas turbines, so they can’t move foreward. Oracle has a 9% interest rate on the loans to build that, then they raise 2% after construction, because their credit rating is dogshit. So now Oracle is claiming force majeur to get out of their increased debt obligations, which you can imagine, is killing interest in lending to them.

In Texas they just blocked new grid hookups over political backlash to skyrocketing electricity prices. That killed another Oracle expansion they just canceled, and another one is trucking in gas for gas turbines as an alternative to the electrical grid, which you might imagine is expensive.

Which brings us to now. The banks are looking at local opposition blocking these projects (local action is working), states are blocking them to avoid getting voted out, hardware costs are shooting up, and the assets backing these loans are too small for so much investment.

So the level of risk no longer works.

—

My personal theory is that Oracle is a sacrificial lamb. It’s a dead end tech company that lives on licensing fees, and they’ve fucked themselves on these expansions. They’re failing at being a hyper-scaler as margins decrease.

I bet we see someone take Oracle private when their stock collapses, freeing the board of fiduciary duty to the stakeholders with a payout. This move is critical because it blocks other hyperscalers from putting in an offer to acquire their assets to shore up debt.

OpenAI will acquire the now private Oracle through a special funding round and buy up their hardware for pennies on the dollar. This will absolve them of the debt obligations Oracle has to OpenAI that have killed their credit ($500b), and stabilizes the Oracle balance sheet.

OpenAI will write this down and offer Oracle’s creditors equity stakes in lieu of cash, and will have acquired all their next gen hardware far cheaper than their competitors.

This might even fuck over Nvidia, the incestuous funders of the AI circlejerk. If Oracle gets to write off their GPU debts then Nvidia loses a fuck ton of sales, tanking their stock price — they take that OpenAI equity offer and look like they’re playing the game. OpenAI wants to build their own chips anyways, just look at jalapeño.

chaogomu@chaogomu@lemmy.world

Replying to @⁨panda_abyss@lemmy.ca⁩

they wouldn’t sign such stupid deals for no reason.

Greed. The reason was greed. They bought into the hype and thought they could print money.

And all the tech companies are doing it, Oracle was just the sick man of the bunch, and will be the first to fall, dragging the rest down with them.

All because they’re offloading trillions in debt to special purpose vehicles, the same thing that tanked Enron, the difference is that Enron, with $400 million in debt, was lying about it, and the current tech companies doing the exact same shit, are disclosing the debt legally, but still hiding it in the fine print of their disclosures.

The debt will still crash the economy, but at least it’s out in the open?

kreskin@kreskin@lemmy.world
edited

Replying to @⁨chaogomu@lemmy.world⁩

Also Larry is not nearly as sharp or thorough as he used to be, and he’s turned into a bit of a crumugeonly headstrong dick in his old age. No 82 year old is as sharp as they ised to be, despite how people like to lie about it. No 70 year old feels 40 anymore either. He has made numerous mistakes inside Oracle, and now he has run the whole company straight off a cliff, as aging boomers will tend to do.