"DEC and QNTM do have a "special" arrangement because of the transfer."
I think that their "arrangement" was for three years, contractually, which means that it is over now, if true. I'm sure that they still do a lot of business together, but not under the terms of the sale.
On another topic, here is a paragraph on QNTM and MKE's "arrangement" from the 10-Q just released. Although one can never say for sure with these, it sounds to me like MKE has a pretty good deal; if QNTM's forecasts aren't on the mark, they take the hit, not MKE (so much for off-loading the risks of manufacturing fixed costs):
Volume and Pricing. MKE's production schedule is based on the Company's forecasts of its product purchase requirements, and the
Company has limited contractual rights to modify short-term purchase orders issued to MKE. Further, the demand in the desktop
business is inherently volatile, and there is no assurance that the Company's forecasts are accurate. In addition, the Company
periodically negotiates pricing arrangements with MKE. The failure of the Company to accurately forecast its requirements or
successfully adjust MKE's production schedule, which could lead to inventory shortages or surpluses, or the failure to reach pricing
agreements reasonable to the Company would have a material adverse effect on the Company. For example, a portion of the $103
million special charge recorded in the third quarter of fiscal 1998 reflects losses on firm inventory commitments associated with
high-end disk drive product production at MKE.
Comments? Pretty quiet here today. Much like the stock. |
