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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 213.69-3.5%1:48 PM EST
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To: andreas_wonisch who wrote (30891)3/8/2001 10:07:33 PM
From: kash johalRead Replies (2) of 275872
 
andreas,

re:"About 80% of our business is now under long-term contracts. Actually, approaching 85%, I've just been advised. So we really have very little impact from changes in spot market pricing."

Well there are lies and damn lies.

Majority of high volume semiconductors are sold under some form a contract.

And then there is the "spot" price.

These parts are typically sold by AMD's distributors who try and maximise their revenues depending upon the spot market.

In general flash spot prices last year were running 3-4x contract prices last year.

The answer by AMD is "technically" correct as they sell to disti's at a certain price with price protection. And the disti's mark up as they can depending upon market conditions.

Major OEMS and contract houses such as Nokia, flextronics etc purchase by negotiated contract and PO's.

And AMD has led by signing multi-year contracts with a "price collar" which changes as the "contract price" of flash changes.

There is a tendency for folks to fall in love with their favorite stocks and look for any glimmer of hope.

The bottom line is that flash will be in free fall.

AMD is therefore significantly exposed to this, like it or not.

regards,

Kash
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