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Politics : Formerly About Advanced Micro Devices
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To: James Yegerlehner who wrote (23807)10/1/1997 9:52:00 PM
From: Paul Engel   of 1582533
 
James - Re: "Is there some subtle revenue-recognition thing I'm missing here?"

There is a major distinction - especially with distributors.

Most IC manufacturers ship a lot of material through distributors. However, these distributors are "guaranteed" price protection. That is, the IC manufacturer will make sure that any price cuts on material held in stock by the distributor are passed on the distributor.

Also, distributors generally reserve the right to return to the IC manufacturer any and all unsold inventory after about a 90 day period.

In order to "buffet" wild swings in distributor sales, Intel and many others do not "recognize" as sales those devices shipped to distributors UNTIL AFTER the distributor has sold these same ICs to his end customer.

Thus, Intel ships a ton if devices to these distributors but records only those devices RESOLD by the distributor as SALES, AFTER they are RESOLD.

I'm not certain if AMD follows this same, conservative, accounting policy.

Paul
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