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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: kash johal who wrote (34743)	4/3/2001 9:34:29 PM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

Kash, AMD has been relatively weak vs intel for last week or so. So maybe there's some bad news being priced in. I don't mean to pick on you, but what is this "some bad news", who knew about this news to "price it in", who are all these people who know this news, how come you and I don't know it? Joe

To: kash johal who wrote (34743)	4/4/2001 7:41:19 AM
From: Road Walker	Read Replies (3) \| Respond to of 275872

Kash, re: suing Alcatel/ "Well it's clearly not a good thing." There is a one paragraph story in this morning's WSJ about the suit. In it they say that at the time of the agreement, AMD was selling 16 mb chips on the open market at $43.50; today it's $7.25. A couple of observations. One, although this sends a message that AMD expects customers to honor their supply agreements, it also sends a message that AMD may be a less flexible supplier, which could have an impact on future agreements. Suing your customers is rare, for a lot of good reasons. The other point is that with the decline in prices for flash, and the glut of supply, it's going to be very difficult for any flash manufacturer to maintain contract prices. The best path is to renegotiate the agreements. Manufacturer's are not going to pay 5 times their competition for components, it would make their end product uncompetitive. That said, if both sides were smart in their negotiations, AMD's sales agreements have a multiple of spot price clause, or some other contingency for a dramatic increase or decrease in the component price. A well crafted supply agreement will create a strong supplier/customer relationship. The Alcatel agreement obviously destroyed the relationship. John