Apple sapphire partner GT Advanced Technologies files for bankruptcy

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Comments

  • Reply 161 of 220
    MarvinMarvin Posts: 14,873moderator
    Stock sure can move fast these days. This is what volatility looks like - it lost over $1.3b in minutes:

    1000

    Their SEC filings are here:

    http://investor.gtat.com/sec.cfm?DocType=Annual

    "our success in the sapphire material business will depend on Apple"

    "On October 31, 2013, our wholly-owned subsidiary, GTAT Corporation (or GTAT), and Apple Inc. entered into a Master Development and Supply Agreement and related Statement of Work (or the MDSA), pursuant to which GTAT has agreed to supply sapphire material to Apple. We have granted Apple exclusive rights with respect to the sapphire materials manufactured with the ASF® units operated by GTAT, subject to certain exceptions, and have granted certain intellectual property rights in connection with sapphire growth and related technologies, including rights with respect to new sapphire technologies created by us. While the MDSA specifies our minimum and maximum supply commitments, Apple has no purchase requirements under the terms of the MDSA.

    On the same date, GTAT also entered into a Prepayment Agreement with Apple pursuant to which we are eligible to receive $578 million, which we refer to as the Prepayment Amount, in four separate installments, as payment in advance for the purchase by Apple of sapphire material. The Prepayment Amount must be used by GTAT to purchase components necessary for the manufacture of ASF systems and related equipment principally for use at our Arizona manufacturing facility. We have received the first two installments of the Prepayment Amount. We are required to repay the Prepayment Amount ratably over a five-year period beginning in January 2015, either as an offset to amounts due from Apple for the purchase of sapphire material under the MDSA or as a direct cash payment to Apple."

    "in 2013, we signed a multi-year supply agreement with Apple to provide sapphire material. We will own and operate ASF furnaces and related equipment to produce the material at an Apple-owned facility in Arizona which we lease."

    "As a result of the agreements that we have entered into with Apple Inc. in October 2013, our sapphire business is undergoing a transition from being principally a provider of crystal growth equipment to being a provider of both crystal growth equipment and sapphire materials. The success of our sapphire materials business will be driven, in large part, by the continued funding of Apple pursuant to the prepayment agreement (which may be halted under certain circumstances), our ability to timely commence operations at our Arizona facility and Apple purchasing sapphire materials from us in adequate quantities, among others. Apple is under no obligation to purchase any sapphire materials from us. If Apple does not purchase a sufficient amount of sapphire materials, we may be required to repay all or a portion of the $578 million prepayment using our own cash resources, which repayment must be satisfied over the five year period ending January 2020. Apple is not subject to any minimum purchase commitments under the terms of the MDSA."

    Their earnings are here:

    1000

    Something doesn't add up there. They've been declaring assets of over $1b for the last 2 years, before Apple's investment. They also made a pretty huge loss just after March 2012. They went from $183m profit to $142m loss in just 9 months and then the following year (last year) made a net loss of $82m.

    The biggest cause seems to be a massive drop in revenue from $956m in 2012 to $299m in 2013 and revenues keep falling. They don't have very many customers.

    If Apple was really interested in buying them, they could very easily do that for $114m and their quarterly operating costs are just $50m plus $50m for production. They're using sapphire in the Watch and a few elements of the iPhone. Operating costs would be $400m per year for say 200m devices = $2 per device.

    They could perhaps use sapphire on their computer displays to stop the laptops at least from getting scratched. It doesn't look likely that GT will get back on their feet on their own with their revenues dropping. Operating costs are low so restructuring won't help, they'd have to sell off assets and somehow get more revenue from their handful of customers. I'd say it makes more sense for Apple to buy them.
    sog35 wrote:
    i have been a strong supporter of Tim Cook. This is the first time i've said anything negative about him

    You said he should be replaced by Elon Musk after the stock fell.
  • Reply 162 of 220
    rogifanrogifan Posts: 10,669member
    Ben Bajarin's theory is Apple loaned GT money to help keep them afloat so others couldn't control pricing.
  • Reply 163 of 220
    SpamSandwichSpamSandwich Posts: 33,407member
    Quote:
    Originally Posted by Marvin View Post



    Stock sure can move fast these days. This is what volatility looks like - it lost over $1.3b in minutes:

    ...

     

    Sure looks like this company should get a visit from the SEC. Something funny definitely has happened here.

  • Reply 164 of 220
    SpamSandwichSpamSandwich Posts: 33,407member
    Quote:

    Originally Posted by Rogifan View Post



    Ben Bajarin's theory is Apple loaned GT money to help keep them afloat so others couldn't control pricing.



    On the other hand, Apple could acquire the company for pennies on the dollar now.

  • Reply 165 of 220
    Quote:

    Originally Posted by sog35 View Post

     

     

    so you would be okay if Apple paid Tim Cooks brother $570M for doing nothing?

     

    Because that's exactly what GTAT did for Apple.  Its a small amount relative to Apple but as an Apple investor i want answers.


     

    I like how you're ignoring posts like my previous reply which show how your reasoning here is flawed. Remember that if nothing else, Apple has gotten hundreds of millions of dollars worth of camera lenses, touch ID sensors and watch faces out of them. Even if they had mismanagement, or it simply came down to research not bearing out their hopes and a future product not coming to fruition as a result, the deal wasn't a waste. Calm down and wait for all the facts to come in.

  • Reply 166 of 220
    High probability AAPL has a secured a priority lien on the sapphire equipment as well as the rights to any IP related to manufacturing sapphire products for electronics. '
  • Reply 167 of 220
    quazzequazze Posts: 29member
    Quote:
    Originally Posted by SpamSandwich View Post





    I'd not buy a stock going through bankruptcy. The shares may be declared worthless.



    Link: http://www.sec.gov/investor/pubs/bankrupt.htm

     

    What Will Happen to My Stock or Bond?

    A company's securities may continue to trade even after the company has filed for bankruptcy under Chapter 11. In most instances, companies that file under Chapter 11 of the Bankruptcy Code are generally unable to meet the listing standards to continue to trade on Nasdaq or the New York Stock Exchange. However, even when a company is delisted from one of these major stock exchanges, their shares may continue to trade on either the OTCBB or the Pink Sheets. There is no federal law that prohibits trading of securities of companies in bankruptcy.

    Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.

  • Reply 168 of 220
    malaxmalax Posts: 1,598member
    Quote:

    Originally Posted by sog35 View Post

     

     

    all fair and good.

     

    but GTAT shareholders lose 99% of their investment while the GTAT CEO swims in his millions.


    Sucks to be them.  I think I'll go to GTAT Insider and vent about it.

  • Reply 169 of 220

    What are the implications for the ?Watch? Any? None? Interesting.

     

    I note that on the UK Apple website, the ?Watch is advertised in big letters as coming in 2015, not early 2015 as stated in the keynote and press release. Is this a hint of delays? Maybe; could be nothing, of course.

  • Reply 170 of 220
    Quote:
    Originally Posted by TomMikele View Post



    Sometimes the comments are just so ridiculous, all I can do is shake my head. And I don't mean ridiculous like on some other tech sites where the Apple lovers and haters attack each other on a erosional level. Most of the remarks above mine, but not all of them, reflect just about zero knowledge of business, bankruptcy law, Apple's deal with GT any roll they have in that business. There is a lot of ungrounded, baseless speculation to go along with a lack of knowledge. What the heck, that never stopped most of you from loading on and then lauding each other's remarks.

     

    Don't do yourself down; seems you managed to write a post as well as shake your head.

     

    Congratulations on your multi-tasking.

     

    Next job: write a post, shake your head and rub your stomach.

  • Reply 171 of 220
    sockrolidsockrolid Posts: 2,789member

    Originally Posted by Phone-UI-Guy View Post

     

    That analyst covering GT Advanced really should be fired. He was pumping the stock and apparently didn't do any homework if they were in that bad of financial condition.


     

    Agree that many analysts have an agenda.  Easy to spot them.

     

    But who knows?  Maybe Apple's contract with GTAT had a performance clause.

    As in "No money until you can produce iPhone-sized sapphire screens in production quantity."

    Remember, there was a rumor that GTAT missed producing sapphire screens in quantity "by a few weeks."

  • Reply 172 of 220
    Quote:
    Originally Posted by sog35 View Post

     

    This is the first major blunder Mr Cook has done with Apple.

     

    I am really dissappointed in him.  To give a company a zero interest $500M loan and then that said company goes bankrupt.  Really bad.  Hopefully Apple can minimize the loss from this horrible alliance.

     


     

    Yeah, Tim Cook should have fired all the incompetent people at GTAT! Oh wait ...  he can't do that because HE'S NOT THE CEO OF THE F&$*ING COMPANY!

     

     




    Hard to believe a company like GTAT could trick Apple out of $500M

     

    I hold GTAT shares and the #1 reason was because I trusted Tim Cooks judgement on the company.  



     

    By that logic you should also be held responsible because you're a shareholder.  I'm very disappointed in you!!!!  You should have known better!!!!  You should be fired!!!!  Doesn't even matter where you work, they should just fire you regardless.

     

    Quote:

     Why would Cook invest $500M in a crap company?  Looks like he got duped just like me.  But unlike me Mr Cook had all the inside information.


     

    Umm no he didn't, because HE'S THE CUSTOMER NOT A FRIGGIN' INSIDER!  WRONG AGAIN!

     

    What you're suggesting amounts to nothing less than insider trading.  The only way Apple could have known what was really going on at GTAT is if they obtained their information illegally.  Yeah, that would have gone over very well for Apple.  Losing 500M (if they even lost all of it) is peanuts by comparison.

  • Reply 173 of 220
    solipsismxsolipsismx Posts: 19,566member
    What are the implications for the ?Watch? Any? None? Interesting.

    I note that on the UK Apple website, the ?Watch is advertised in big letters as coming in 2015, not early 2015 as stated in the keynote and press release. Is this a hint of delays? Maybe; could be nothing, of course.

    My guess is that the UK won't be part of the first launch, or at least Apple isn't sure they will be based on the differing messages for the US and UK (I haven't checked other countries)


    US:
    1000

    UK:
    1000



    PS: Also note the top of their website simply states Watch and not the branded ?Watch. I know the extra Apple is redundant but they have used their brand and name in other places on their site when it's part of the product. Perhaps it just looked ugly with that solid Apple symbol in the header, but I can't see them using just TV instead of ?TV or Apple TV if that ever becomes more than a "hobby."
  • Reply 174 of 220
    maestro64maestro64 Posts: 5,039member
    Quote:
    Originally Posted by sog35 View Post

     

    My point is this:

     

    If Apple due dilegance did not reveal a weakness in GTA what kind of dilegance did they do for Beats?

     

    If GTAT was able to scam Apple out of $500M what kind of confidence do I have in their future acquisitions or aliances?


    It was not a scam, they probable did some proof of concept, but the really question was could produce at a high enough quantity and yield at a leave which meet apples needs. Apple finances the factory and it obviously had issue and Apple decided to bail which was a smart business decision on their part since never let sunk costs affect future decisions.

     

    Fast it you lost money and you looking to blame someone one.

  • Reply 175 of 220
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by SolipsismX View Post





    PS: Also note the top of their website simply states Watch and not the branded ?Watch. I know the extra Apple is redundant but they have used their brand and name in other places on their site when it's part of the product. Perhaps it just looked ugly with that solid Apple symbol in the header, but I can't see them using just TV instead of ?TV or Apple TV if that ever becomes more than a "hobby."

    Top marks for observation.  I doubt it's indicative of anything important, but I also noticed a difference in the URLs - www.apple.com/appletv and www.apple.com/watch

  • Reply 176 of 220
    Quote:
    Originally Posted by sog35 View Post

     

     

    You don't need to be an arm chair CEO to know this:

     


    LOL! Yes you do, because armchair CEOs know nothing!  Do you even know what an armchair CEO is?  Hint: it's not a good thing.

     

     




    Step 1 - Give a company $500M

    Step 2 - Rely on said company for your next big thing

     



    You keep saying this how could you possibly know?  Where's your source?  What is even Apple's next big thing and how do you know Apple was relying on GTAT for it?  The fact is nobody except insiders know what Apple's plans were with GTAT, and they were most certainly not relying on them for sapphire as they have other suppliers too.

     

    Quote:

     

    Step 3 - Company goes bankrupt in less than 12 months

     

    Face it: Tim Cook got duped into giving GTAT a $500M zero interest loan.  Now Apple is stuck with hundreds of millions of dollars worth of factory/equipment that they need to sell for pennies on the dollar.



     

    Face it: You got duped into investing in GTAT based on a measly $500M investment and no official word from Apple as to what their intentions with GTAT were - which as repeatedly indicated by various other people here and in many other places - it was likely only a multi-year agreement to provide the camera lenses, Touch ID lenses & Apple Watch faces & nothing more.  If you insisted like that stupid analyst that Apple must have been planning "the next big thing" with GTAT in spite of the chorus of people that demonstrated that the math just doesn't add up, then that's your problem, not Apple's!

  • Reply 177 of 220
    sog35 wrote: »
    all fair and good.

    but GTAT shareholders lose 99% of their investment while the GTAT CEO swims in his millions.
    Let's cut to the chase, sog35. How much did you lose today on GTAT? Therein lies the motivation for your (understandably) emotional posts today. Just don't pretend to be logical and sane when you were just figuratively shot in the face. I lost a bit on call options which are worthless now (Jan '16 @ $15.00), but I also bought in some very high risk shares at $.99 on the odds they may not scrap current stock via Chap 11. I'm hoping GTAT continues producing for Apple. But I'm not going to turn on Cook just because I was on the wrong side of a risky investment. Something tells me AAPL (of which I own more than I should) will come out fine. They do own the land and factory in AZ for those who may have missed it..,
  • Reply 178 of 220
    Quote:
    Originally Posted by sog35 View Post

     

     

    There is a huge difference between buying a lemon car and 'investing' $570M into a company. 


    You're right (for once) it is a huge difference.  For most people a car is a significant chunk of their net worth and/or income, if it turned out to be a lemon it would be devastating for them financially.  On the other hand $570M is less than 0.1% of Apple's net worth, and about 1% of its yearly earnings.

     

    But what was your point again?

  • Reply 179 of 220
    Quote:

    Originally Posted by sog35 View Post

     

     

    its called opportunity cost.

     

    The iPhone6 suppose to have sapphire screen. How many sales were lost because of that?

    The AppleWatch suppose to come out this year. How many sales were lost because of that?

     


    It cannot be stated enough, this is all made up.  Complete fabrication & pure speculation.

     

    How many sales were lost because Apple failed to deliver the iWand Nano?  Millions.  What's the iWand Nano you say?  Yeah, I totally made that up.  See? I can do it too.

     

    Using your definition of opportunity cost one could compute Apple's to be in the hundreds of trillions of dollars.

  • Reply 180 of 220
    solipsismx wrote: »
    What are the implications for the ?Watch? Any? None? Interesting.

    I note that on the UK Apple website, the ?Watch is advertised in big letters as coming in 2015, not early 2015 as stated in the keynote and press release. Is this a hint of delays? Maybe; could be nothing, of course.

    My guess is that the UK won't be part of the first launch, or at least Apple isn't sure they will be based on the differing messages for the US and UK (I haven't checked other countries)


    US:
    1000

    UK:
    1000



    PS: Also note the top of their website simply states Watch and not the branded ?Watch. I know the extra Apple is redundant but they have used their brand and name in other places on their site when it's part of the product. Perhaps it just looked ugly with that solid Apple symbol in the header, but I can't see them using just TV instead of ?TV or Apple TV if that ever becomes more than a "hobby."

    Isn't it rather risky for Apple simply to refer to their Watch? Anyone, like Samsung, could bring out a Watch or a Samsung Watch; no-one will get any protection on the name watch or Watch.

    I know you like the idea of moving away from i-products, but I think Apple would have used iWatch but for the fact that they couldn't.
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