Part One: NVIDIA Isn't Enron - So What Is It?

Summary

---

Better Offline – Part One: NVIDIA Isn't Enron - So What Is It?

Podcast: Better Offline
Host: Ed Zitron (Cool Zone Media & iHeartPodcasts)
Date: December 17, 2025

---

Episode Overview

This episode of “Better Offline,” hosted by tech industry veteran Ed Zitron, dives deep into the recent controversies and widespread speculation about whether NVIDIA, the celebrated AI hardware behemoth, is engaged in Enron-style fraud or financial engineering. Addressing viral claims, internal NVIDIA communications, and the company's financial practices, Ed debunks conspiracies and provides clear-eyed critical analysis of NVIDIA’s business model, questioning why the company is so desperate to distance itself from historic corporate scandals like Enron, WorldCom, and Lucent.

---

Key Discussion Points

1. The Origin of the NVIDIA-Enron Comparison

• NVIDIA’s Internal Memo:

  • At the end of November, NVIDIA leaked an internal memo to address concerns paralleling it to Enron, the infamous energy trading company that collapsed due to fraud (02:14).
  • The memo, distributed via Barron’s reporter Tae Kim (described by Ed as “NVIDIA’s biggest booster”), insisted NVIDIA is “nothing like Enron” and denied any fraudulent parallels.

• Viral AI Substack Claims:

  • The controversy partly stemmed from a viral piece by Shanaka Anselm Perera (“The algorithm that detected the $610 billion fraud”), which accused the AI industry—and NVIDIA specifically—of circular financing and fraud.
  • Ed tears down Perera’s claims as “AI slop” and “straight up got lies in it, like made up stuff.”

    “If you need another example, Perera claims... If you bothered to go and look at Nvidia’s inventory from that period, which is public by the way, you can see that inventory increased.” – Ed (05:00)

• Short Sellers and Panic:

  • Ed notes that NVIDIA’s memo seemed a response to short sellers like Michael Burry (of "The Big Short" fame), indicating how public skepticism was getting under the company’s skin.

2. Dissecting the “NVIDIA = Enron” Argument

• NVIDIA’s Business Model—Not Illegal, But Maybe Dodgy:

  • Ed argues that, while NVIDIA is engaging in what may look like circular deals with AI-focused “NeoClouds” (like CoreWeave, Lambda, and Nebius), it isn’t illegal—just “weird and unsustainable.”

    “As dodgy and weird and unsustainable as this all is, it isn’t illegal and it certainly isn’t Enron.” – Ed (08:52)

• NVIDIA’s Responses to Fraud Accusations:

  • Special Purpose Entities: Ed (playing both himself and "NVIDIA" in a satirical dialogue) notes that NVIDIA doesn’t use special purpose vehicles (SPVs) like Enron did to hide debt.

    “Nvidia does not use special purpose entities to hide debt and inflate revenue.” – “Nvidia”/Ben (10:25)

  • Revenue Recognition & Vendor Financing: NVIDIA claims not to have vendor financing arrangements à la Lucent or to improperly capitalize expenses as WorldCom did.

    “We are not aware of any claims that Nvidia has improperly capitalized operating expenses.” – “Nvidia”/Ben (11:03)

3. Comparisons to WorldCom and Lucent

• WorldCom:

  • Ed provides a history lesson on WorldCom’s fraud: capitalizing operating expenses to inflate profits, leading to an $11 billion scandal and jail time for CEO Bernie Ebbers.

    “WorldCom was doing capital F Fraud... That is just straight up fraud. So, okay, look, Nvidia... you’re nothing like WorldCom.” – Ed (16:39)

• Lucent:

  • Lucent’s downfall involved risky “vendor financing”—lending money to customers to buy Lucent’s own products and artificially boosting sales.

  • Ed admits parallels in how NVIDIA’s cloud startup customers (e.g., CoreWeave, Lambda) use future revenue guarantees or leases from NVIDIA to raise loans, which are then used to buy more NVIDIA GPUs—an echo of Lucent’s games, but not illegal.

    “Okay, Nvidia, look, we’re friends. Okay? I hate to say this, but I kinda get why somebody might say you’re doing Lucent stuff.” – Ed (19:15)

    “Though Nvidia had agreed to buy $6.3 billion of compute as the buyer of last resort of any unsold capacity... Nevertheless, Nvidia can afford this and it isn’t illegal.” – Ed (25:56)

4. Inventory Growth and Revenue Recognition

• Inventory and Receivables:

  • Critics claim ballooning inventories (“inventory up 32% QoQ”) and growing receivables indicate waning demand.
  • Ed stresses this is not unusual for big asset-heavy companies, and NVIDIA’s own statements refute claims of unhealthy inventory growth, breaking down what’s finished goods, work in progress, etc.

    “First, growing inventory does not necessarily indicate weak demand. In addition to finished goods, inventory includes significant raw materials and work in progress.” – “Nvidia”/Ben (28:40–28:52)

• Payment Terms and Financing Structures:

  • NVIDIA insists “payment is due shortly after product delivery” with DSO (days sales outstanding) improved to 53 days, claiming lack of disclosure of vendor financing means such things aren’t material.
  • Ed pokes at how NVIDIA parses its language, observing that “we don’t disclose” is different from “we don’t do,” and noting the company's knack for “accountancy alchemy.”

    “Those are the exact words. Those words are very different to ‘I do not have any.’ We do not have any vendor financing arrangement. I do not disclose when I go to the bathroom, but I absolutely do use the toilet.” – Ed (36:13)

5. Satirical Tone and Notable Quotes

• On the Memo’s Existential Tone:

  • The episode lampoons NVIDIA’s odd fixation on distancing itself from Enron, painting NVIDIA as an anxious roommate babbling in the night.

    “Why does NVIDIA need you to know it’s nothing like Enron? Did it do something like Enron?” – Ed (31:08)

• On the Reality of Modern Tech’s Financialization:

  • Ed closes by reckoning that, while the financial engineering is murky and concerning, it’s legal and a sign of the times—not evidence of outright fraud or looming collapse.

    “None of these companies are doing fraud. That’s the world we live in. They are doing accountancy alchemy. They’re moving stuff around.” – Ed (36:45)

---

Memorable Quotes & Moments

• Debunking AI-Fraud Theories:

  “I'm not pissed off at anyone listening to this, I'm pissed off at any financial media that gave this any kind of attention. And I'm kind of pissed off at Nvidia for doing it too. It's AI slop.”
  — Ed Zitron (06:31)

• On NVIDIA’s Corporate Practices:

  “Nvidia’s clients likely get decent payment terms to raise debt or move cash around to get them paid. Okay, everyone, calm down. You can go back to bed. Like my buddy, who is nothing like Enron, by the way, just said.”
  — Ed Zitron (28:20)

• Satirical Observation:

  “I do not disclose when I go to the bathroom, but I absolutely do use the toilet.”
  — Ed Zitron (36:13)

• Summing Up NVIDIA’s Position:

  “Nvidia truly isn’t like Enron after all. Meta, Microsoft and Apple are the ones getting into energy trading, to the point that I actually think it’s time that someone explained what exactly happened to Enron with a more modern twist.”
  — Ed Zitron (37:45)

---

Key Timestamps

• [02:14] – Introduction to NVIDIA’s leaked memo and the Enron comparison
• [05:00] – Discrediting viral AI fraud claims
• [08:52] – Ed’s overview: NVIDIA’s business looks weird but isn’t criminal
• [10:25–12:00] – NVIDIA responds: Not like Enron or WorldCom (with detailed rebuttals)
• [19:15–25:56] – Explaining Lucent’s fall and how vendor financing compares to NVIDIA’s cloud ecosystem
• [27:16–28:52] – Response to inventory and receivables concerns
• [29:55] – Revenue recognition specifics ("upon shipping a product and deeming collectibility probable")
• [36:13] – Parsing NVIDIA’s carefully chosen language on vendor financing
• [37:45] – Final assessment: accountancy alchemy vs. illegal fraud

---

Tone & Style

Ed Zitron laces critical financial analysis with irreverence, sarcasm, and tech industry insider references. The episode is an energetic synthesis of debunking, story-telling, and skeptical humor—perfect for listeners who want to understand the nuance behind financial headlines without the corporate PR gloss.

---

Takeaways for Listeners

• NVIDIA is not Enron—its business practices, while complex and perhaps unsustainable in the long run, do not constitute accounting fraud à la Enron, WorldCom, or Lucent.
• Financial media and viral newsletters can amplify misleading narratives; always check primary sources and company filings.
• Modern tech finance relies on creative structures, revenue recognition, and payment terms—legal, but sometimes hard to follow or fully transparent.
• The episode sets up a deeper dive into Enron’s history for the next installment, promising more context for listeners.

---

Listen if you want:
A satirical, informed, debunking-heavy take on “AI bubble” narratives, NVIDIA’s business model, and how modern tech skates the line between innovation and financial engineering.

---

Transcript

[A]

This is an I Heart Podcast.

[B]

Guaranteed Human.

[A]

This is Sophie Cunningham from Show Me Something. Do you know the symptoms of moderate to severe obstructive sleep apnea, or OSA in adults with obesity? They may be happening to you without you knowing. If anyone has ever said you snored loudly, or if you spend your days fighting off excessive tiredness, irritability and concentration issues, it may be due to osa. OSA is a serious condition where your airway partially or completely collapses during sleep, which may cause breathing interruptions and oxygen deprivation. Learn more at don'tsleep on OSA.com this information is provided by Lilly, a medicine company.

[B]

Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory. A separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, Accounting, Inventory, E Commerce, hr. Fully integrated, easy to use and built to grow with your business. Thousands have already made the switch. Why not you try Odoo for free at o-oo.com that's odoo.com the following ad.

[C]

Is sponsored by Pet's Best Insurance Services. You knew right away he's perfect. The one for you. Those puppy dog eyes. That cute little button. No, you don't even mind the drool. When you find your perfect match in a dog or cat, the love is unconditional. Your budget, on the other hand, has realistic limits. Help protect your heart and your wallet with pet insurance from Pets Best. With plans starting from less than a dollar a day, you can get up to 90% cash back on eligible vet bills. Pets Best makes it easy to pick a plan that works for you and your bank account. Find the perfect match for your Perfect [e-mail] Pet insurance products offered and administered by Pets Best Insurance Services, LLC are underwritten by American Pet Insurance Co. Or Independence American Insur Co. For terms and conditions, visit www.petsbest.com. policy products are underwritten by American Pet Insurance Company, Independence American Insurance Co. Or Ms. Transverse Insurance Co. And administered by Pets Best Insurance Services, LLC. $1.00 a day premium based on 2024 average new policyholder data for accident and illness plans. Pets age 0 to 10 Oral health.

[D]

Goes beyond just aesthetics. It's deeply connected to your general health and well being. That's why preventing oral health problems before they start is so important. When you use the Colgate Total Active Prevention System, you're not just helping to prevent oral health problems like cavities and gingivitis, you're laying the groundwork for overall wellness. Colgate Total's three product routine includes a reformulated toothpaste, an innovative toothbrush and a refreshing antibacterial mouthwash that all support a healthy mouth. In fact, the three products were designed to work together to be 15 times more effective at reducing bacteria buildup in six weeks starting from week one compared to a non antibacterial fluoride toothpaste and flat trimmed toothbrush. Take control of your oral health and get the Colgate Total active prevention system today so you can be dentist ready. Visit shop.colgate.com total. Hello and welcome to this week's Better Offline. I'm Ed Zitron. Better Offline now. At the end of November, Nvidia put out an internal memo that tried to, well, get ahead of a few things is how I'd put it that had been bubbling up in the news. Specifically comparisons to Enron, the massive energy trading giant that imploded in the early 2000s after, well, a lot of fraud, also with some other concerns about its earnings. Said memo was leaked to Barron's reporter Taekim, who is one of the largest Nvidia boosters in the known universe. He posts constantly about how Nvidia is going to be the biggest, most hugest company in the world. He he's meant to be like an analyst and a reporter, but he mostly just seems like a cheerleader and it's kind of embarrassing now. Nevertheless, he was leaking a memo that was quite worrisome. So I don't know, Nvidia chose to disseminate it through him, but also to short sellers. The actual providence of this or is it providence? I don't know, but someone will correct me is kind of confusing. Anyway, long story short, people have a few concerns about Nvidia and well, you shouldn't though you shouldn't have any concerns at all because Nvidia's very secret not to be leaked immediately Document spent thousands of words very specifically explaining how Nvidia was fine and most importantly, by the way, nothing like Enron. Now why did I need to say all of this? And why did Nvidia need to say all of this? Well, Nvidia wrote this note as a response to both short seller Michael Burry, famous of course from the Big Short and Scion Capital. There's a whole bunch of other stuff there, but putting that aside, but also because of another thing, a guy called Shanaka Anselm Perera who wrote a piece called and I quote the algorithm that detected the $610 billion fraud, how machine intelligence exposed the AI industry's circular financing scheme and I've now been sent this about 11 times, maybe more, since it came out. Now, the reason I'm not going to link to Pereira's piece in the show Notes or in the companion newsletter to this episode is simple. It's full of bullshit and I've had some very good reporters link to this thing. I've heard from a lot of people say, oh, this scared me. And the fact that it scared Nvidia really pissed me off too, because it's straight up got lies in it, like made up stuff. I'm not even talking just misstatements. I'm talking about really specific things it's made up. For example, in one part, Pereira talks about major semiconductor distributor Arrow Electronics stating things in its Q3 2025 earnings about Nvidia. Let me be fucking clear about this. Really pissed me off. Arrow makes no statements of any kind about Nvidia on its earnings calls, in its 10Q or its earnings presentation. You can go and look. He doesn't link to any, by the way. And if you need another example, Barrera claims that when Nvidia launched the Hopper H100 architecture in Q2 fiscal 2023, also amid reported supply constraints and strong demand, inventory declined 18% quarter over quarter as the company fulfilled backlogged orders. If you bothered to go and look at Nvidia's inventory from that period, which is public by the way, you can see that inventory increased. Now, I'm not pissed off at anyone listening to this, I'm pissed off at any financial media that gave this any kind of attention. And I'm kind of pissed off at Nvidia for doing it too. It's AI slop. And I've not heard of Pereira before, but as LinkedIn says, he is, and I'm not shitting you, the CEO at Pet Express Sri Lanka, I would suggest getting your financial advice elsewhere and at a minimum making sure that you read outlets that actually source their data. Anyway, as you're probably working out, all of this is fine and normal. This happens normally all the time. Companies do this all the time, especially successful ones. And there's nothing to be worried about here because after reading all seven pages of this document, we can all agree that Nvidia is nothing like Enron. No, really though, Nvidia is nothing like Enron. And it's kind of weird that anyone, especially you by the way, is saying that Enron and Nvidia have any similarities at all. They just put out a very long document, by the way, and it says they're not Enron. Why'd you keep asking about Enron? All right, why are you being weird? Okay, well now Nvidia said something about Enron, but that's because fools and vagabonds keep suggesting that Nvidia was like Enron. And very normally Nvidia has decided thousands of words at a time to set the record straight. And I genuinely no jokes, do agree. Nvidia is nothing like Enron. Putting aside how I might feel about the ethics or underlying economics of generative AI, Nvidia is an incredibly successful business that has incredible profits, holds an effective monopoly on Cuda, which powers the underlying software layer to running software on GPUs, specifically generative AI, and not really much else that has any kind of revenue potential. Now, I talked a bit about CUDA and the Haters guide to Nvidia, which I've linked to in the show notes. And yes, while I believe that one day this will all be seen as one of the most egregious wastes of capital of all time, for the time being, Jensen Huang is potentially the greatest salesperson of all time. Nevertheless, people have somewhat run away with the idea that Nvidia is Enron, in part because of the weird circular deals Nvidia's built with NeoClouds, but dedicated AI focused cloud companies like Core, Weave, Lambda and Nebius, who run data centers full of GPUs sold by Nvidia, which they then use as collateral for loans to buy more GPUs from Nvidia. I can see why people are a little concerned. But as dodgy and weird and unsustainable as this all is, it isn't illegal and it certainly isn't Enron. Because Nvidia, as I've been trying to tell you, is nothing like Enron. Now, you may be a little confused. I get it that Nvidia is bringing up Enron at all. Nobody seriously thought that Nvidia was like Enron. Not even the pseudonymous and analyst, just Daario, who's been questioning its accounting practices for years because Enron was genuinely one of the largest criminal enterprises in history. And Nvidia is at worst, I believe, a bit dodgy and doing whatever it can to survive through various forms of accountancy alchemy. Wait, wait. You still think Nvidia is Enron? What's it going to take to convince you? I just told you that Nvidia isn't Enron. Nvidia itself has explained at length, as I'll explain. By the way, it's not Enron. And I'm not sure why you keep bringing up Enron all the time. Stop being an asshole. Enron and Nvidia are nothing alike. Look, look. Nvidia's own memo said that, and I quote, Nvidia does not resemble historical accounting frauds because Nvidia's underlying business is economically sound, its reporting is complete and transparent, and it cares about its reputation for integrity. Now, I know what you're thinking. Why is the largest company on the stock market having to reassure us about its underlying business economics and reporting? One might immediately begin to think Streisand effect style that they are. There might be something up with Nvidia's underlying business, but nevertheless. You know what? Fuck it, Nvidia. Grab your coat, we're going out. Let's forget all of this ever happened. Wait, what. What was. What was that?

[E]

First, unlike Enron, Nvidia does not use special purpose entities to hide debt and inflate revenue. Nvidia has one guarantee for which the maximum exposure is disclosed in Note 9 of $860 million and is mitigated by $470 million in escrow. The fair value of the guarantee is accrued and disclosed as having an insignificant value. Nvidia neither controls nor provides most of the financing for the companies in which Nvidia invests.

[D]

Oh, okay. I wasn't really thinking about all of that. I was literally just. I was just saying how you were nothing like Enron. We're good. Come on, let's. Let's go.

[E]

Second, the article claims that Nvidia resembles WorldCom but provides no support for the analogy. WorldCom overstated earnings by capitalizing operating expenses as capital expenditures. We are not aware of any claims that Nvidia has improperly capitalized operating expenses. Several commentators alleged that customers have overstated earnings by extending GPU or depreciation schedules beyond economic useful life. Rebutting this claim, some companies have increased useful life estimates to reflect the fact that GPUs remain useful and profitable for longer than originally anticipated, in many cases for six years or more. We provide additional context on the depreciation topic below.

[D]

Um, okay. I mean, I wasn't even thinking about WorldCom. I wasn't thinking about WorldCom at all. I genuinely hadn't thought about WorldCom in a while. You're nothing. You're nothing like them. Listeners. For context, WorldCom was a telecommunications company that collapsed in the early 2000s in part because it had a tendency of overstating its earnings by billions and billions of dollars in total $11 billion. This followed a failed merger with Sprint, which was blocked for antitrust reasons, essentially forcing the company to grow its stock through customers rather than mergers. You know, normal way kind of. The telecom sector was pretty saturated back then, making this a pretty tall ask, and so we ended up with a bunch of dodgy accounting which all fell apart when the company filed for bankruptcy. Nvidia are you? You're not doing anything WorldCom y are you? Why are you bringing up WorldCom? It's cold and wet out, but the good news is that I bought a bunch of cashmere sweaters from Quint's which fit really nicely and are both warm and go with just about anything. Especially the leather racer jacket I got recently too. I love their T shirts and I'm currently eyeing one of their leather messenger bags, their gloves as well, and they got some fetching boots. I really like Quints and everything I've bought so far has felt high quality, like I'd get from a high end department store despite being much cheaper. I've genuinely been really impressed and Quints is able to do this by partnering directly with trusted factories with high standards of craftsmanship and ethical practices, cutting out the middleman and selling stuff at half the cost of high end brands. I'm really impressed by everything I've got and I'm going to get more. Get your wardrobe sorted and your gift lists handled with quints. Don't wait. Go to quints.com beta for free shipping on your order and 365 day returns. Now available in Canada too. That's Q-U-I-N c-e.com betta free shipping and 365 day returns. Quince.com beta still jumping between tools just to update your website? Framer unifies design, CMS and publishing on one Canvas. No handoff, no hassle. Everything you need to design and publish in one place. Think unlimited projects, unlimited pages, unlimited collaborators and all the essentials. Vectors, 3D transforms, gradients, wireframes. Everything you need to design totally free. And while Framer already built the fastest way to publish beautiful production ready websites, it's now redefining how we design for the web with the recent launch of Design Pages, a free canvas based design tool, Framer is more than a site builder, it's a true all in one design platform. From social assets to campaign visuals to vectors and icons, all the way to a live site. Framer is where ideas go live, start to finish, ready to design iterate and publish all in one tool. Start creating for [e-mail] design and use code offline for a free month of framer pro. That's framer.com design and use promo code offline framework.com design promo code offline Rules and restrictions may apply.

[B]

Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other? One for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one, fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting out or already scaling up. Plus, it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for [e-mail] that's o d o o.com this.

[A]

Is Sophie Cunningham from Show Me Something. Do you know the symptoms of moderate to severe obstructive sleep apnea, or OSA, in adults with obesity? They may be happening to you without you knowing. If anyone has ever said you snored loudly, or if you spend your days fighting off excessive tiredness, irritability and concentration issues, it may be due to osa. OSA is a serious condition where your airway partially or completely collapses during sleep, which may cause breathing interruptions and oxygen deprivation. Learn more at don'tsleep on OSA.com this information is provided by Lilly, a medicine company.

[D]

To be clear, by the way, WorldCom was doing capital F fraud and its CEO, Bernie Ebbers went to prison after an internal team of auditors led by WorldCom VP of internal auditing Cynthia Cooper, reported $3.8 billion in misallocated expenses and phony accounting entries. That is just straight up fraud. So, okay, look, Nvidia, you were really specific about saying you didn't capitalize operating expenses, capital expenditures. You're not doing that again. That's. That's great. Great stuff. I literally never thought you'd done that before. I genuinely agree. You're nothing like WorldCom Nvidia nothing like WorldCom. Anyway, glad to hear about the depreciation stuff. Looking forward to hearing more about.

[E]

Third, unlike Lucent, Nvidia does not rely on vendor financing arrangements to grow revenue. In typical vendor financing arrangements, customers pay for products over years. Nvidia's DSO was 53 in Q3. Nvidia discloses our standard payment terms with payment generally due shortly after delivery of products. We do not disclose any vendor financing arrangements. Our customers are subject to strict credit evaluation to ensure collectability. Nvidia would disclose any receivable longer than one year in long term. Other assets. The 623 million other balance as of Q3 does not include extended receivables. Even if it did, the amount would be immaterial to revenue.

[D]

Um, alright. Alright man. If anyone asks whether you will like famed.com crash out loosen technologies, I'll be sure to correct them. God, I'm gonna have to explain another business that failed around the millennium right now, aren't I? After all, Lucent situation was really different. Well, well, sort of. Lucent was a giant telecommunications company, one that was for a time extremely successful. Really, really successful. In fact, turned around by the now infamous Carly Fiorina. Fiorina, who joined Lucent from AT&T, had a strong start. And in her first few years at the company before she left to join HP, Lucent saw revenues grow by 58% to $38 billion and net income grow from a small loss to a $4.8 billion profit. Profit Nvidia. This all sounds great. Why wouldn't you want to be compared to. Oh, oh, yeah, yeah, sorry. You see, in 1997, Fiorina took over the group responsible for selling gear to telecoms providers. And within one year, that business unit grew by just shy of a quarter. In two years it had jumped from $15.7 billion when Fiorina took over to $23.6 billion in 1999. Lucent did this by lending money to its customers with its loans appearing balance sheets as quoting CNN here, an allegedly sold asset. Now Lucent was classifying debt as an asset and did something called vendor financing, which means you lend somebody money to buy something from you. It turns out Lucent did a lot of this and in a very simple way, this is like giving someone a $10 loan to buy $10 of bricks from you. It's just handing the same $10 back and no one's really doing well. Here, look. These loans were also very generous with Telco's small fledgling telecommunications companies with minimal assets and Revenue, by the way, and often mountains of high interest debt, often paying nothing up front. The loans themselves were often bigger than the company itself and far beyond what the company could hope to repay. Okay, Nvidia, look, we're friends. Okay? I hate to say this, but I kind of get why somebody might say you're doing Lucent stuff. After all, rumor has it that in your supposed deal with OpenAI, a company that burns billions of dollars a year will maybe involve leasing your GPUs to them, which sure sounds like you're doing vendor finance.

[E]

We do not disclose any vendor financing arrangements.

[D]

Oh, all right.

[B]

Okay.

[D]

You're not disclosing any vendor financing arrangements. Okay, I. I got it, man. Anyway, back to Lucent. Lucent really did fuck up big time, though, indulging in the dark art of circular vendor financing, the likes of which Nvidia has not. Kind of. In 1998, it signed its largest deal, a $2 billion deal, an equipment and finance agreement with telecommunications company Windstar, which promised to bring, I shit you not, $100 million in new business over the next five years and build a giant wireless broadband network, along with expanding Windstar's optical networking. I quote the Wall Street Journal, Windstar was one of the scores of standalone startup companies created in the late 1990s to compete in the market for local telecom services. These firms, known as Competitive Local Exchange carriers, or CLICs, raised billions of dollars in debt and equity financing and embarked upon ambitious plans to compete with incumbent carriers. For a time in the late 90s, their stocks were hot properties, outpacing even Internet stocks. In December 1999, Wired would say that Windstar's small white dish antennas heralded a new era and new mindset in telecommunications and included this awesome quote about Lucent from CEO and founder Will Ruhana. On one level, we're a customer and they are a supplier. On another level, they're a financier and we are a borrower. On yet another level, they are providing services around the world to accelerate our development. They also want to use our service and have guaranteed $100 million in business. Hell yeah. I also love this because you can read this or hear this or what have you and go and read current magazines talking about these companies and see them do the same things. Just look. Oh my God. There is actually another great quote I might want to share with you. Windstar is a publicly traded company and has more than 4,000 employees and reports more than $300 million in annualized core revenues. We love annualized revenues, don't we, folks? We love them. Just do month times 12, you get the biggest numbers we've ever seen. They're beautiful. We love them. A company making about $25 million a month, $25 million a month in revenue signed a $2 billion loan, $2 billion in financing for business, that would make them $100 million across five years. They aren't teaching this in business school, do they? Weirdly, Winstar's Wikipedia page says that revenues were $445.6 million for the year ending 1999, or around $37.1 million a month. These numbers don't line up so good, and probably because Windstar was kind of crooked. Now, Windstar, they loved raising money. Two years later, in November 2000, it would raise $1.02 billion, for example, and it raised a remarkable $5.6 billion between February 1999 and July 2001, according to the Wall Street Journal. $900 million of that came in December 1999 for an investment for a bunch of investors, including, of course, Microsoft, with analyst Greg Miller of Jefferies and Co saying the Microsoft investment is a significant endorsement that the technology will be used more aggressively in the future. Windstar can use the capital. They sure fucking can, can't they? Now, another fun thing happened in November 2002. Lucent would admit it overstated its fourth quarter profits by improperly recording $125 billion in sales, reducing that quarter's revenue from profit profitable to break even. Things would eventually collapse when Windstar couldn't pay its debts, filing for Chapter 11 bankruptcy protection on April 18, 2001, after failing to pay $75 million in interest payments to Lucent, which had cut access to the remaining $400 million. Not $400, $400 million of its $1 billion loan to Windstar. As a result, Windstar would file a $10 billion lawsuit in bankruptcy court in Delaware the very same day, claiming that Lucent breached its contract and forced Windstar into bankruptcy by, well, not offering to give it more money that it would not pay off elsewhere. Things have begun to unravel for Lucent. A January 2001 story from the New York Times told the strange story of Lucent, a company that made over $33 billion in revenue in its previous fiscal year, asking to defer the final tranche of payment, $20 million for an acquisition due to, and I quote, accounting and financial reporting considerations. Now, why would they do that? Well, Lucent needed to keep that money on the books to boost its earnings as its stock was in the toilet. And was about to announce it was laying off 10,000 people and a quarterly loss of over a billion dollars. Over the course of the next few years, Lucent would sell off various entities and by the end of September 2005, it would have 30,500 staff and a stock price of $2.99, down from a high of 75 bucks a share at the edge of 1999 and 157. According to VC Thomas Tungus, and that is his name, Lucent had $8.1 billion of vendor financing deals. At its height, Lucent was still a real company selling real things, but it had massively overextended itself in an attempt to meet demand that didn't really exist. And when Lucent realized that, it decided to create demand itself to please the markets. To quote MIT Tech review and author Lisa Endlich, it believed that setting and meeting the expectations of Wall street subsumed all other goals and that Lucent had little choice but to ride the wave. To be clear, Nvidia is quite different from Lucent. It has plenty of money and the circular deals it does with Core, Weave and Lambda don't involve the same levels of risk. Nvidia is not, to my knowledge, backstopping Corwe's business or providing it with loans. Though Nvidia had agreed to buy $6.3 billion of compute as the buyer of last resort of any unsold capacity and did mention an unnamed partner it had agreed to backstop the leases of in its most recent earnings. Nevertheless, Nvidia can afford this and it isn't illegal. Though it is obviously propping up a company with flagging demand. Nvidia doesn't appear to be taking on masses of debt to fund its empire either. With over $56 billion in cash on hand and a mere $8.4 billion in long term debt. Okay, we got through this man. Nvidia is nothing like Lucent either. Okay, maybe there are some similar, but it's different. No worries at all. I know I'm chill, I'm relaxed and I'm most importantly normal. You still seem nervous in video. I promise you, if anyone asks me if you're like loose and I'll tell them you're not, I'll be sure to tell them you're nothing like Lucan. Are you okay? Dude, when did you last sleep?

[E]

Ok, so about inventory growth indicating waning demand, people are claiming that growing inventory in Q3, which was above 32% quarter over quarter, suggests that demand is weak and chips are accumulating unsold or customers are accepting delivery without payment capability, causing inventory to convert to receivables rather than cash.

[D]

Whoa, whoa, okay, slow down, slow down. Who's been saying this? Oh, everybody. Did Michael Burry scare you? Did you watch the big short and say, ah, Christian Bale's playing Pantera again. Anyway, now you've woken up everybody else in the house and they're all wondering why you're talking about receivables. Shouldn't that be fine? Nvidia is a big business. Your business is pretty big, man. And it's totally reasonable to believe that a company planning to sell $63 billion of GPUs in the next quarter would have ballooning receivables. $33 billion in receivables, up from $27 billion last quarter. And growing inventory $19.78 billion, up from $14.96 billion in the last quarter. That is.

[B]

That is.

[D]

That is pretty big up. But nevertheless, Nvidia is a big asset heavy business, which means Nvidia's clients likely get decent payment terms to raise debt or move cash around to get them paid. Okay, everyone, calm down. You can go back to bed. Like my buddy, who is nothing like Enron, by the way, just said.

[E]

First, growing inventory does not necessarily indicate weak demand. In addition to finished goods, inventory includes significant raw materials and work in progress. Companies with sophisticated supply chains typically build inventory in advance of new product launches to avoid stockouts. Nvidia's current supply levels are consistent with historical trends and anticipate strong future growth. Second, growing inventory does not indicate customers are accepting delivery without payment capability. Nvidia recognizes revenue upon shipping a product and deeming collectability probable. The shipping reduces inventory, which is not related to customer payments. Our customers are subject to strict credit evaluation to ensure collectibility. Payment is due shortly after product delivery. Some customers prepay. Nvidia's DSO actually decreased sequentially from 54 days to 53 days.

[D]

Nice. Dude, you're totally right. It's pretty common for companies, especially large ones, to deliver something before they receive cash. It happens. I'm being sincere. Sounds like companies are paying great. But, you know, can you just be just a little more specific? Like the whole shipping things before their paid thing.

[E]

Video recognizes revenue upon shipping a product and deeming collectibility probable.

[D]

Yeah, okay, I thought I heard you up the first time. What does deeming collectability probable mean? You could have just said we get paid like 90, 95% of the time within two months or whatever. Unless it's not like 95 on 95. How often. How often are you paid with in two months? Most companies don't break this down, by the way. But then again, most companies, not Nvidia, the largest company on the stock market. If I'm honest, nobody else has recently had to put anything out that says I'm not Enron. And I want to be clear that Nvidia is not like Enron. For real, though, it really isn't like Enron. And jokes aside, bits aside, there were very different businesses. They were very different indeed. It is. It is very strange though, that Nvidia wants somebody to think about how it's nothing like Enron. This was technically an internal memo and thus there is a chance its existence was built for only Nvidians or short sellers or something worried about the value of the stock. And we know it's definitely written to try and deflect Michael Burry's criticism as well as that of a random AI slop substacker.

[B]

It's just.

[D]

It's just weird. It's weird. I don't really know what's going on and I really want to know. Why does Nvidia need you to know? It's nothing like Enron. Did it do something like Enron? Is there a chance that you or I may mistakenly say, hey, is Nvidia doing Enron?

[B]

Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything. CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more just juggling logins. Just one seamless system that makes work easier. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting out or already scaling up. Plus, it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for [e-mail] that's o d o o.com this.

[A]

Is Sophie Cunningham from Show Me Something. Do you know the symptoms of moderate to severe obstructive sleep apnea or OSA in adults with obesity? They may be happening to you without you knowing if anyone has ever said you snored loudly or if you spend your days fighting off excessive tiredness, irritability and concentration issues. It may be due to osa. OSA is a serious condition where your airway partially or completely collapses during sleep, which may cause breathing interruptions and oxygen deprivation. Learn more at. Don't sleep on OSA.com this information is provided by Lilly, a medicine company.

[C]

Protect your pet with insurance from Pets Best Plans start from less than a dollar a day. Visit petsbest.com Pet insurance products offered and administered by Pets Best Insurance Center, LLC are underwritten by American Pet Insurance Company or Independence American Insurance Company for terms and conditions, visit www.petsbest.com. policy products are underwritten by American Pet Insurance Company, Independence American Insurance Company or Ms. Transverse Insurance Company and administered by Pets Best Insurance Services, LLC. $1.00 a day premium based on 2024 average new policyholder data for accident and illness plans. Pets Age 0 to 10 Season 2.

[A]

Of unrivaled basketball is here and the talent is unreal.

[C]

Paige Beckers, Nafiza Collier, Kelsey Plumb, Brianna Stewart and Moore are back to redefine the game. Unrivaled basketball season two, sponsored by Samsung Galaxy Tips off January 5th on TNT, TruTV and HBO. Max.

[D]

Hey Nvidia, how you feeling? Yeah, yeah. You had a rough night. You were saying all this crazy stuff about Enron. Are you doing okay? No, no, I. I get it. You're nothing like Enron. You said a lot of that last night. So. While you were sleeping. Yeah, you've been asleep 16 hours, by the way. You were pretty messed up. You brought up Lucent, then puked in my sink and tried to scream at my cat. I did some digging though, and like, I get it. You're nothing like Enron. Enron was breaking the law and Nvidia is definitely not doing that. But you said you didn't use special purpose vehicles recently. You did though. You. You are. You're not using them like Enron. Enron moved the debt around on the SPVs.

[B]

But.

[D]

But you're investing $2 billion in Elon Musk's special purpose vehicle that will then use that money to raise debt to buy GPUs from you. From you, Nvidia that would then be rented to Elon Musk. And this is very different to what Enron did. I am with you, dude. Don't let the haters keep you down. No, I. I don't think a T shirt that says Nvidia is not like Enron for These specific reasons will help you either. Wait, wait. Okay, look, one thing though. You have this theoretical deal lined up with Sam Altman to invest $100 billion in OpenAI. And yes, you said in your latest earnings that it was actually a letter of intent with the opportunity to invest, which doesn't mean anything. Got it. And the plan was you would lease the GPUs to OpenAI. If the deal happens now, theoretically, how would you go about doing that? Nvidia, you'd probably need to do exactly the same deal you did with Xai. You would. You would buy the GPUs from yourself and then rent them to OpenAI. That's. That's a little Lucent here. Kind of sounds like vendor financing and. Oh, you mentioned that already.

[E]

Look, man, unlike Lucent, Nvidia does not rely on vendor financing arrangements to grow revenue. In typical vendor financing arrangements, customers pay for products over years. Nvidia's DSO was 53 in Q3. Nvidia discloses our standard payment terms with payment generally due shortly after delivery of products. We do not disclose any vendor financing arrangements.

[D]

Let me stop you right there. Let me stop you right there for a second. You were on about this last night and you scared my cats. And you were crying about something called 2 nanometer. I don't know. First of all, why are you bringing up specifically typical vendor financing agreements? Do you have atypical ones? Also? I'm jazzed, I guess I'd say, to hear you disclose your standard payment terms, but what standard payment terms? What exactly where can I find those, by the way? Because you didn't link them, you didn't, didn't mention them. Where are those? And also, look, you're saying the words. You don't disclose any vendor financing arrangements. Those are the exact words. Those words are very different to I do not have any. We do not have any vendor financing arrangement. I do not disclose when I go to the bathroom, but I absolutely do use the toilet. Let's not pretend that Nvidia doesn't have a history in helping getting its business buddies funding. Nvidia has deals with both Lambda and Core Weave to guarantee that they will have compute revenue, which they in turn use to raise debt, which is then used to buy more Nvidia GPUs. You've learned how to feed the debt into yourself. Nvidia. I'm genuinely impressed. This is great stuff. I'm having the time of my life with how not like Enron you are. And I'm serious that I 100% do not believe you were like Enron, but what exactly are you doing, man? What do you. What are you doing to get Wall street what it wants? I'm serious though. Seriously, folks. And thank you, Ben, for being Nvidia there. Nvidia really isn't like Enron, though. It really isn't. And I hear a lot of people saying things like even about Sam Altman, I want it. This is a brief rant here saying people are going to go to jail, people are going to go to prison. There's fraud, there's fraud here. Corwe's doing fraud this, that and the other. None of these companies are doing fraud. That's the world we live in. They are doing accountancy alchemy. They're moving stuff around. They are. There are ways that Nvidia could be doing all of this, and I'm very sure that this is the case perfectly legally. Sam Altman not breaking the law either, assuming he's been honest with his investors. Nevertheless, for real though, Nvidia is nothing like Enron. Enron was a criminal enterprise and Nvidia is not. More than likely, Nvidia is doing relatively boring vendor financing stuff and getting people to pay them on 50 to 60 day timescales, probably net 60. And like it said, it gets paid up front sometimes. Nvidia truly isn't like Enron after all. Meta, Microsoft and Apple are the ones getting into energy trading, to the point that I actually think it's time that someone explained what exactly happened to Enron with a more modern twist. Or at least as much as it's possible within the confines of a podcast that isn't exclusively about Enron. But I'm going to explain next episode what the fuck Enron was, and you can have some fun listening to it. Thank you, thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osawski. You can check out more of his music and audio [e-mail] m a t t o s o w s k-I.com youm can email me at ezetteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat. Where's your ed at? To visit the disc Discord and go to R betteroffline to check out our Reddit thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, Visit our website coolzone media.com or check us.

[C]

Out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcast.

[A]

This is Sophie Cunningham from Show Me Something. Do you know the symptoms of moderate to severe obstructive sleep apnea, or osa, in adults with obesity? They may be happening to you without you knowing. If anyone has ever said you snored loudly, or if you spend your days fighting off excessive tiredness, irritability and concentration issues, it may be due to osa. OSA is a serious condition where your airway partially or completely collapses during sleep, which may cause breathing interruptions and oxygen deprivation. Learn more at don'tsleep on OSA.com this information is provided by Lilly A Medicine Company.

[C]

Season 2 of Unrivaled Basketball is here.

[A]

And the talent is unreal.

[C]

Paige Beckers, Nafiza Collier, Kelsey Plumb, Brianna Stewart and more are back to redefine the game. Unrivaled basketball season two, sponsored by Samsung Galaxy, tips off January 5th on TNT, TruTV and HBO.

[B]

Max Amazon Five Star Theater presents real customer reviews performed by Eva Longoria. Tonight's review sports briefs. Oh boy, where do I even start.

[D]

With these performance mesh boxer briefs? These boxer briefs are like a magician's trick.

[B]

You know the one where you go, where did that rabbit come from?

[D]

So if you're looking for underwear that not only performs well, but also gives your package the attention it deserves, then look no further.

[B]

5 stars Nickalicious shop the Perfect Gift.

[D]

This holiday season on Amazon. This is Julian Edelman from Dudes on Dudes with Gronk and Jules. Sunday mornings I've got my game day ritual, coffee, lucky socks and now new Morning Uncrustable Sandwiches. It's all about that 12 gram protein boost with the new Uncrustables Bright Eyed Berry or Up and apple flavors. Bright Eye Berries got a feisty receiver energy up an apple. Your classic do it all tight end, soft, pillowy, packed with protein and easy enough for Gronk to grab from the freezer. Whether you're on the couch, driving to the tailgate or heading to the locker room, new Morning Uncrustable Sandwiches are the MVP of snacks.

[E]

Your new Sunday kickoff ritual starts here.

[D]

With new Morning Uncrustable sandwiches. Packed with 12 grams of protein, this.

[A]

Is an I heart podcast.

[D]

Guaranteed human.