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“The vast majority of this year's net loss, $72 billion, resulted from accounting charges tied to changes in the value of convertible notes and other instruments the company issued to raise funding, the Journal report said.”

Interesting, would love to know the details of this.

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Basically the $72B are updating the value of what their convertible notes would be worth if they IPOed today at their current valuation. It's a non cash expense but it does matter because it dilutes all current shareholders and thus lowers earnings per share.

yes it affects book equity

What we need to see is the statement of cash flows.

Whats happening to that cash balance?

People are missing the point IMO - the reinvestment needs is what matters. A) how large are they? B) How will they change over-time? C) How does a slow down in capabilities and closing of the gap by China + price-competition affect their cash flows from operations net of the reinvestment (e.g. will it draw down their cash balance).

You can only hold the perception of increasing capabilities for so long - humans are very adaptive as we are seeing and scare-tactics do not work forever.

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