Amy,
re: If vendors can return goods, that means there is a potential that Intel is counting some revenue on shipped product that potentially could be returned as cancelled goods, unopened chips, by vendors?
No. Intel doesn't recognize revenue from it's ditributors until it is sold by the distributor. After that, I assume it's the distributors responsibility. For the OEM's, as I understand it, they recognize the revenue when it ships to the OEM, implying that the OEM's take possesion of the goods when it leaves the Intel facility.
There may be a price protection scheme in the Intel contracts to the OEM's. I know the OEM's have price protection contracts with the retailers, and that sort of stuff can flow up hill to the component manufacturers. (Price protection definition: In a category where prices decline rapidly, a manufacturer will guarantee that if the price of a particular model declines, they will make up the difference on the inventory that the customer has in inventory, at the time of the price decline. So if ABC company has 100 model X, and the price goes from $100 to $90, the supplier will send them a credit for $1000).
John |
