It wasn’t the opposite .

By 2015 they were trying to hide how much of the group growth and profits were largely contributed by just AWS , i.e. they were hiding the e-commerce margins .

Without AWS and subscriptions, Amazon is quite an unprofitable company.

Both overall growth and margin driven by AWS(and prime) while E-commerce revenue remains outsized because they count GMV as revenue which is iffy even when they own the merchandise, but being largely a marketplace these days GMV is very misleading metric.

It would be like Stripe decided to count their revenue as $1.4T the amount they processed this year as revenue rather than $10-20B they actually got after paying the banks, merchants , VISA etc . This 20B is not profit either just the pie from which salaries cloud costs etc have to be paid to get to actual profit.

The difference is Amazon was being quiet about AWS, whereas everyone is hyping up how game changing their AI is.

Fair. There are counter examples, although those are pretty rare. Usually publicly traded companies don’t hide when they’re doing really well.

The inverse true now with AWS. Lots of press about analysis on how AWS is in “last place” on AI and while AWS leadership has been doing a lot of hand waving to say they’re not, it’s a pretty safe bet this week’s earnings call won’t have any hard financial numbers to counter press that they’re way behind.

Yes. The point of the article though is that the list of usual excuses is becoming hard to justify here.

Sounds like you are suggesting there are a lot of legitimate reasons to mislead shareholders. OpenAI is private and that's one thing. Microsoft is not.

If its equity accounted it won't be considered a related party as far as I understand. Related party in IFRS isnt what you think it is. Its the equivalent of "extended family".

A play about Enron's financial scandal was recently back showing in London.

Feels somewhat prescient.

AFAIK Microsoft didn't put any kind of liquid money into OpenAI, it's something like "you can use up to nB USD of our resources for free", not sure how that should go into accounting. It could even be a liability without much juggling.

You’re not wrong, but the point of the article is that for a publicly traded company there’s an expectation of more transparency. The size of the losses is getting to a point where it can’t just be kept hidden inside a handwavy “other” line item.

IF said investments are strategically correct (considering their amounts). A few years bck companies were making strategic investments in the VR/AR/XR goggles, on a bet that tech would become cheaper in a few years while quality would improve dramatically. And they were correct in the price and quality aspects. But they were fundamentally wrong strategically, regarding millions of people wanting a display semi-permanently strapped in their visual area. Apparently not many people want it and even less need it, which was drastically different from the mode of work of CEOs, which is to always move and issue commands while walking/driving etc. Same story with multiple failed voice assistants.

That opinion really doesn’t jibe with all of the money “the market” is putting into money losing AI companies with no hopes of profitability in the near future or - Tesla.

> Markets don’t reward long term investments. Everything has to be short term, and if it’s not paying off instantly, short term investors get no value and want it stopped.

The AI investment bubble is almost entirely about making long-term, extremely expensive investments. That's what the gigantic datacenter build-out is about, not short-term investments and short-term returns. They're telling everybody, persistently, that they're making huge long-term bets, and the market is rewarding them like crazy. See: Oracle's run due to long-term bets on AI (it's certainly not short-term results causing the stock to do that, their short-term growth has been mediocre).

Amazon for two decades repeatedly told investors they were making extremely expensive, long-term investments in build-out (eg their fulfillment build-out era), where the primary payoff would be far into the future. The market bought into the long-term on the basis that it was attached to Bezos at the center (that he'd be there to deliver that long-term result). The same is true about Elon Musk with Tesla: they have endlessly made outlandish long-term proclamation to drive their stock. Tesla: robot super business, self-driving taxi business, et al - these are 10-20-30 year long-term claims by Tesla and the market has aggressively rewarded it. That's because they think Musk will/might be there to guide it to actuality. In most cases investors don't buy in because they know the CEO & team won't be around even seven years from now.

Markets (investors) reward long-term if they can be made to believe in the long-term. The issue is that most companies are not believable on long-term statements, they don't have a leadership that will be around for any long-term delivery. Buffett, Bezos, Musk, Zuckerberg were/are long-term attachments so the market has been willing to buy in on various long-term bets.

“Irrational exuberance.”

There are parallels here of folks getting so caught up in the hype that they forgot business fundamentals. Everytime folks say “but this is different” and every time it’s not.

But isn’t there some of that? Microsoft buys services for prices it might influence the sticker price of

Yes

Heard on the Street is the financial side of the WSJ.

Anything else you can add to the conversation?

If the deal is still based around capped revenue, I wouldn't call it an ownership stake.

As far as I know, they have not disclosed it. If you have more information about something concrete regarding ownership, I'd love to hear it. Maybe I haven't understood everything that was stated.

In the end, whatever Microsoft has is probably less valuable than a sizable ownership chunk that most people seem to assume.

I imagine a lot of people are investing in Microsoft as a proxy to OpenAI. Those people are set to be disappointed.

Context matters. White House has history and the wing was defenitely demolished.

Whether you want to hide it and ignore the history and praise the ballroom, you alternatively omit the demolish part. Propaganda works for both ways.

Glad that every statement of personal opinion is now "propaganda"...

I get it, it's hard to wrap your head around two statements being true at the same time

Is it really just a ballroom? I see few people mentioning the East Wing was actually covering the White House's underground bunker. Maybe Trump wants a more future-proof nuclear refugee.

Let's say he was demolishing the whole White House, and was replacing it with a high rise, with his name in gold letters on the outside. Would the headline be "Trump expands White House. It's now bigger and better!". Or would it be that Trump destroyed a historic building that he had no right to destroy?

No, it is humorous. Everyone knows the story and there is literally a link to a publication owned by one of the other donors (with full disclosure).

I mean, it would have been possible to examine the birthday letters of Myhrvold and Trump and a couple of Trump quotations to put the financing into context.

de·mol·ish - /dəˈmäliSH/ - verb - pull or knock down (a building).

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Picture of the East wing today:

https://ichef.bbci.co.uk/ace/standard/1024/cpsprodpb/2089/li...

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This isn't hard.

Yes… a lot of this is pretty hidden on the balance sheets but eventually GAAP catches up one way or another.

Microsoft did $245B in revenue in 2024.