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

To: Road Walker who wrote (34764)	4/4/2001 8:07:42 AM
From: andreas_wonisch	Read Replies (1) \| Respond to of 275872

John, Re: The best path is to renegotiate the agreements. I don't think so. According to your example the spot price for 16mb AMD flash was around $40 one year ago, now it's at $7. But according to the PR AMD was selling its flash substantially below the spot price to Alcatel, e.g. for $20. AMD could have made more profit then but decided it was a better strategy to have a long lasting agreement with relatively flat prices. This was an disadvantage for AMD one year ago but has become a big advantage now. So why should they renegotiate now again? AMD and Alcatel both signed the agreement and both knew that the flash situation could change. AMD would have never signed the agreement with Alcatel if they knew that it wasn't worth the paper it was written on. If Alcatel doesn't like the prices they have to pay now, they should have negotiated better in the first place. IMO there's nobody here to blame except Alcatel. And I'm sure AMD already made big concessions. Having said that I still don't like it that AMD is suing its customer. But in this case it was apparently unavoidable and sets an example for other customers who might be trying to find ways out of their previously signed contracts. Andreas

To: Road Walker who wrote (34764)	4/4/2001 9:49:44 AM
From: Scot	Read Replies (1) \| Respond to of 275872

John and Thread 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. Just a quick delurk to make one point. Sometimes performance is worse than breach. Alcatel may have decided that it made more sense to breach the contract and risk a suit and accompanying damages than pay the differential between the contract and spot price. Scot ps: One other unrelated point. As I recall, the stock buyback was intended to offset the dilutive effect of employee grants, and was not a buyback in the traditional sense.