Ooops.. wrong article.
Try this..
From Robertson Stephens....
"Eric Rothdeutsch, Semiconductor/Computer Hardware
"AMD announced last night that it is suing Alcatel Business Systems for breach of contract on a flash memory supply agreement," said Rothdeutsch. "Announced on April 3, 2000, the two-year agreement was worth around $300 million to AMD and supported a broad range of Alcatel's products, including DSL modems, cellular phones, and telecommunications infrastructure. This lawsuit highlights to us a number of points regarding the current weak semiconductor environment and AMD. First, Alcatel's alleged breach indicates the severity of the current down-turn. Second, we think it is highly unusual for a supplier to sue its customer and is done only as a last resort, if at all. Third, given how unusual it is for suppliers to sue customers, AMD must feel it has a solid legal leg to stand on, i.e., an ironclad contract, in our view. This speaks to AMD's negotiating ability and its success of incorporating "teeth" into its contracts, not just with Alcatel but also the other numerous customers that AMD has signed long-term supply agreements with over the last 12-18 months. Finally, this lawsuit puts all AMD partners on notice that they too could be subject to a lawsuit if they choose to breach. The net is that AMD has sent a message to the markets that it is a supplier that takes its agreements seriously. Although it is unclear what the longer- term implications are to AMD's customer relationships, its clear that in the near term, AMD's agreements provide not only a shield, but also a sword, and AMD is not afraid to wield it. We are maintaining our Buy rating on AMD."" |
