John,
Let me take a guess how the AMD/Alcatel situation will play out. First, when Alcatel responds, they will say it wasn't a price issue, but a service or quality issue that made them stop buying from AMD. Then the two companies will trade insults privatly within the industry, and damage each others reputations. They will both spend mucho dollars on lawyers for the next year+, and when they ultimately realize that there will be no satisfactory end to the dispute, they will settle with a short term supply agreement at market prices, that will allow both to claim victory.
Suppliers don't sue customers, it's bad business. AMD has next to zero percent chance of collecting damages, they will just hurt their reputation.
Do you think Cisco will continue to buy products it doesn't need, at inflated prices? In the real world, the only way a supply agreement gets enforced is if there was an upfront payment by the vendor to the buyer. And in that case, the upfront payment is just refunded.
I wonder who Alcatel is buying their product from. I've got a pretty good guess, and I suspect that's why AMD made this brain dead move.
John |
