I am a bit surpised at this. I would have thought Apple, already having manufacturing in the U.S., would have either a) moved to own GTAT, or b) at least taken possesion of equipment to build out their own factories.
As sapphire is so expensive, Apple could have saved on margin by manufacturing in-house.
I am quite surprised!
No surprise here that Apple didn't do it themselves.
Obviously sapphire for iPhone screens was a failed technology. What would they manufacture, rings?
What surprises me is setting up for large scale production before the technology was proven.
Using that logic, anyone who invested in GTAT could "not lose a cent" either by just holding on their crappy stock forever. Or if AAPL dropped by 25% tomorrow none of us would have lost any money, but that's not a very useful perspective.
But an intelligent investor wouldn't do that.
If the stock was effectively worthless, you'd sell it or write it off as a loss, use the capital loss to offset capital gains from the year.
Let's say you think that loser stock will eventually come back in the long run. You would need to stay out of it for thirty days, then buy back in. A lot of investors do this at the end of the year. Sell in December 2014, apply the capital loss to your 2014 taxes, then buy shares in January 2015.
Whether or not GTAT is such a stock is highly questionable. It is up to the individual to accept the risks of any investment.
You cannot compare GTAT to Apple or Coke. GTAT is BANKRUPT. Dont think Coke or Apple is going bankrupt any time soon.
Buffet is well know for holding stocks for decades and he overcomes the temporary dips in stocks. I bought Apple in late 2012 and at one point I was down 50%. But I did not sell so I did not lose a penny. I recently sold almost all my Apple holdings and profited 50%.
So its true. I did not lose a cent in 2013 when Apple stock was down unless I sold.
I know what you're saying, but it's only true from a tax perspective. If I bought an asset for $10,000 and it immediately drops to $1 and I hang onto that asset forever, is it more reasonable to say I lost $10,000 or "I haven't lost anything." Or less, extreme, if I buy 100 shares of AAPL this week for $100/share and a month from now it's at $75, so my $10,000 is now worth $7,500, why shouldn't I characterize that as having "lost $2,500." A few months later, AAPL comes back to $100/share. Yay, I'm back to square one. I didn't lose any money after all. But what actually happened is that I first lost $2,500 and then gained it back. Anyone who buy their shares a few months after me, got the gain without the loss. Anyone who tracks their investments understands this. Investment account statements report "gains" and "losses" for reason. They don't say "but don't worry if you don't actually sell your shares, you haven't actually had a gain or loss!"
I am a bit surpised at this. I would have thought Apple, already having manufacturing in the U.S., would have either a) moved to own GTAT, or b) at least taken possesion of equipment to build out their own factories.
As sapphire is so expensive, Apple could have saved on margin by manufacturing in-house.
I am quite surprised!
This is completely contrary to Tim Cook's supply philosophy.
Apple does not manufacture components. It doesn't even do final assembly. Shortly after Tim Cook joined Apple, the company made a move to get out of manufacturing which was a money-losing exercise for Apple.
Component manufacturing is a low-margin business, and frequently requires enormous capital expenditure on new equipment to stay competitive. That's why Apple didn't own the furnaces, they were owned by GTAT. The fact that their agreement includes GTAT selling their 2000+ furnaces on the open market (rather than handing them over to Apple in lieu of the loan repayment), indicates that Apple doesn't really want to take sapphire production in-house.
"For sale: 2000 sapphire furnaces, slightly used. Low miles, original owner, all papers. Owner's manual included."
Those furnaces will end up in the hands of GTAT's competitors and one or more of those may end up providing sapphire to Apple for future applications. Heck, some of those competitors may be the ones who are already providing sapphire for Apple's current uses (TouchID home button cover, rear camera lens cover).
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
Apple can't/won't record this as profits or even as revenue. It's just a zero-interest loan being repaid.
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
Apple can't/won't record this as profits or even as revenue. It's just a zero-interest loan being repaid.
Is there a market for thousands of sapphire furnaces? Why are you so sure the loan will be paid off, even in four years?
I agree buying stocks like GTAT is like gambling. But not all stocks are.
Buffet did not lose a cent. He will only lose when he acutally SELLS the stock. He holds stocks for DECADES. He is doing fine.
If you trade individual stocks you risk more but your returns can be greater also.
The majority of my money is in index funds. My S&P index fund has returned 5% so far YTD.
But I also trade individual stocks. This year my return for individual stocks is 44% which far out paces my index funds. More reward = more risk.
This year I only traded 2 stocks:
Apple - Made $40k
GTAT - lost $5k
Net - 35K gain with 80k invested
The point is that if you are going to trade individual stocks, you should know enough about the market to have a diversified portfolio that will allow you to weather any issues with a particular company, sector, or industry. When you buy and indexed fund, that is all you are doing, except that you are allowing professional fund managers do the choosing. Just like any other endeavor, amateurs can be successful at this stuff, but it is the people that do it every day for a living that are going to have the best chance of success.
Using that logic, anyone who invested in GTAT could "not lose a cent" either by just holding on their crappy stock forever. Or if AAPL dropped by 25% tomorrow none of us would have lost any money, but that's not a very useful perspective.
No, you don't lose a cent by holding on to their stock, but when they get delisted and it drops down to penny stock status, few people are willing to purchase it, so any expected value disappears. Worst is when the company is bought out whole by another company or holding stock and the value is washed down to percentage points of pennies.
I have some low end stock that I purchased that went OTC and then down the toilet. I never sold them, but I have written them off because even substantial holdings are in the $1 - $10 range for the whole portfolio.
The real issue is completely missing from the article: "Who will be the provider of Sapphire now that GT Advanced is no longer in business?" Apple need a steady supply for the TouchID and possibly the new watch.
Since GTA was never producing Sapphire for Apple to start with, I would imagine Apple will continue using their current supplier(s).
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
Yes.
Just because you make a tool doesn't automatically make you the best user of the tool.
Tools are employed by a range of users, some more skilled than others. Hopefully, you are really good at making the tool itself.
The people who manufacture skilsaws may not be the world's best carpenters. The oven manufacturer isn't going to be a world-class bread baker. The people who sew baseballs don't pitch in the World Series. The fine arts paintbrush manufacturer isn't going to be Michelangelo. The movie camera manufacturer isn't going to be Steven Spielberg.
Sometimes the manufacturer will consult with the people who use the tools regularly, listen to feedback on what works and doesn't.
Sometimes the tool you make isn't good enough for a certain task, or the operator isn't good enough. You could work at the oven manufacturer, but at home you often burn the toast.
Some people are better tool makers than tool users. In this case, it seems like GT Advanced promised Apple that they could make a better tool and use it better than anyone else, but they did not do a sufficient job.
Do you think Clayton Kershaw or Miguel Cabrera would be the best people to stitch baseballs? How about your star Little League pitcher?
What happened to the “It’s all Apple’s fault” we were hearing from this outfit? What happened to the for-sure lawsuit that was coming?
Meanwhile there’s an article on Yahoo finance that warms the soul of any Apple follower. Seems IDC, the ‘research giant’ that is always making predictions of doom about Apple, underestimated last quarter’s Mac sales by almost a whopping 10%. Now questions are being asked about IDC’s research ability. Who’da thunk it?
I was thinking the same thing - if the underestimated rather than the usual grossly overestimated numbers analyst general publish then something must be seriously wrong. Besides that, making Apple look good can't sit well with the competitors who pay for the usual fraud perpetrated by so called industry experts.
but i would put the blame on GTAT not Apple for that. GTAT was the expert on Sapphire not Apple.
The blame is on Apple. Apple admitted their process wasn't ready for production.
Quote:
Originally Posted by AnalogJack
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
Not correct, see above.
Quote:
Originally Posted by ericlmercer
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
Uh no. The only money Apple is entitled to is from the sales of the furnaces. Even if it doesn't cover the $439m, Apple can not get it from GTAT.
"Apple will have a $439 million claim against the furnaces and will be paid solely through the furnace sales, GT Advanced Lawyer, Luc Despins said. No other claims will be made by Apple."
No, you don't lose a cent by holding on to their stock, but when they get delisted and it drops down to penny stock status, few people are willing to purchase it, so any expected value disappears.
In GTAT's case that is not true. People and lawyers familiar with bankruptcy proceedings are petitioning the court because they feel GTAT's stock still has value.
Thu Oct 23, 2014 4:28pm EDT (Reuters) - Shareholders of GT Advanced Technologies (GTATQ.PK) are lobbying regulators to form a committee to vouch for their interests in the sapphire maker's bankruptcy, believing their shares may still have value.
While shareholders are typically wiped out in bankruptcy, GT Advanced stockholders believe their equity may not be worthless. Some are reaching out to the U.S. Department of Justice's bankruptcy regulator, the U.S. Trustee Program, asking it to form a committee in GT's bankruptcy to represent shareholder interests.
According to a source close to the effort, law firm Brown Rudnick, which routinely represents creditors in big Chapter 11 cases, is drafting a letter to the Trustee on behalf of a shareholder group requesting a committee.
If you bought GTATQ less than 1 week ago, you would be up 150% today.
Comments
I am a bit surpised at this. I would have thought Apple, already having manufacturing in the U.S., would have either a) moved to own GTAT, or b) at least taken possesion of equipment to build out their own factories.
As sapphire is so expensive, Apple could have saved on margin by manufacturing in-house.
I am quite surprised!
No surprise here that Apple didn't do it themselves.
Obviously sapphire for iPhone screens was a failed technology. What would they manufacture, rings?
What surprises me is setting up for large scale production before the technology was proven.
Using that logic, anyone who invested in GTAT could "not lose a cent" either by just holding on their crappy stock forever. Or if AAPL dropped by 25% tomorrow none of us would have lost any money, but that's not a very useful perspective.
But an intelligent investor wouldn't do that.
If the stock was effectively worthless, you'd sell it or write it off as a loss, use the capital loss to offset capital gains from the year.
Let's say you think that loser stock will eventually come back in the long run. You would need to stay out of it for thirty days, then buy back in. A lot of investors do this at the end of the year. Sell in December 2014, apply the capital loss to your 2014 taxes, then buy shares in January 2015.
Whether or not GTAT is such a stock is highly questionable. It is up to the individual to accept the risks of any investment.
its is useful.
You cannot compare GTAT to Apple or Coke. GTAT is BANKRUPT. Dont think Coke or Apple is going bankrupt any time soon.
Buffet is well know for holding stocks for decades and he overcomes the temporary dips in stocks. I bought Apple in late 2012 and at one point I was down 50%. But I did not sell so I did not lose a penny. I recently sold almost all my Apple holdings and profited 50%.
So its true. I did not lose a cent in 2013 when Apple stock was down unless I sold.
I know what you're saying, but it's only true from a tax perspective. If I bought an asset for $10,000 and it immediately drops to $1 and I hang onto that asset forever, is it more reasonable to say I lost $10,000 or "I haven't lost anything." Or less, extreme, if I buy 100 shares of AAPL this week for $100/share and a month from now it's at $75, so my $10,000 is now worth $7,500, why shouldn't I characterize that as having "lost $2,500." A few months later, AAPL comes back to $100/share. Yay, I'm back to square one. I didn't lose any money after all. But what actually happened is that I first lost $2,500 and then gained it back. Anyone who buy their shares a few months after me, got the gain without the loss. Anyone who tracks their investments understands this. Investment account statements report "gains" and "losses" for reason. They don't say "but don't worry if you don't actually sell your shares, you haven't actually had a gain or loss!"
I am a bit surpised at this. I would have thought Apple, already having manufacturing in the U.S., would have either a) moved to own GTAT, or b) at least taken possesion of equipment to build out their own factories.
As sapphire is so expensive, Apple could have saved on margin by manufacturing in-house.
I am quite surprised!
This is completely contrary to Tim Cook's supply philosophy.
Apple does not manufacture components. It doesn't even do final assembly. Shortly after Tim Cook joined Apple, the company made a move to get out of manufacturing which was a money-losing exercise for Apple.
Component manufacturing is a low-margin business, and frequently requires enormous capital expenditure on new equipment to stay competitive. That's why Apple didn't own the furnaces, they were owned by GTAT. The fact that their agreement includes GTAT selling their 2000+ furnaces on the open market (rather than handing them over to Apple in lieu of the loan repayment), indicates that Apple doesn't really want to take sapphire production in-house.
"For sale: 2000 sapphire furnaces, slightly used. Low miles, original owner, all papers. Owner's manual included."
Those furnaces will end up in the hands of GTAT's competitors and one or more of those may end up providing sapphire to Apple for future applications. Heck, some of those competitors may be the ones who are already providing sapphire for Apple's current uses (TouchID home button cover, rear camera lens cover).
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
Apple can't/won't record this as profits or even as revenue. It's just a zero-interest loan being repaid.
Apple can't/won't record this as profits or even as revenue. It's just a zero-interest loan being repaid.
I think he meant to imply that Apple will be earning profit over $400 million a week while GTAT is spending 4 years to pay back a similar amount.
Is there a market for thousands of sapphire furnaces? Why are you so sure the loan will be paid off, even in four years?
Is there a market for thousands of sapphire furnaces? Why are you so sure the loan will be paid off, even in four years?
Of course... Foxconn!
I agree buying stocks like GTAT is like gambling. But not all stocks are.
Buffet did not lose a cent. He will only lose when he acutally SELLS the stock. He holds stocks for DECADES. He is doing fine.
If you trade individual stocks you risk more but your returns can be greater also.
The majority of my money is in index funds. My S&P index fund has returned 5% so far YTD.
But I also trade individual stocks. This year my return for individual stocks is 44% which far out paces my index funds. More reward = more risk.
This year I only traded 2 stocks:
Apple - Made $40k
GTAT - lost $5k
Net - 35K gain with 80k invested
The point is that if you are going to trade individual stocks, you should know enough about the market to have a diversified portfolio that will allow you to weather any issues with a particular company, sector, or industry. When you buy and indexed fund, that is all you are doing, except that you are allowing professional fund managers do the choosing. Just like any other endeavor, amateurs can be successful at this stuff, but it is the people that do it every day for a living that are going to have the best chance of success.
Using that logic, anyone who invested in GTAT could "not lose a cent" either by just holding on their crappy stock forever. Or if AAPL dropped by 25% tomorrow none of us would have lost any money, but that's not a very useful perspective.
No, you don't lose a cent by holding on to their stock, but when they get delisted and it drops down to penny stock status, few people are willing to purchase it, so any expected value disappears. Worst is when the company is bought out whole by another company or holding stock and the value is washed down to percentage points of pennies.
I have some low end stock that I purchased that went OTC and then down the toilet. I never sold them, but I have written them off because even substantial holdings are in the $1 - $10 range for the whole portfolio.
The real issue is completely missing from the article: "Who will be the provider of Sapphire now that GT Advanced is no longer in business?" Apple need a steady supply for the TouchID and possibly the new watch.
Since GTA was never producing Sapphire for Apple to start with, I would imagine Apple will continue using their current supplier(s).
Under the R&D column.
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
I feel like I'm on the InvestorInsider forums...
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
Yes.
Just because you make a tool doesn't automatically make you the best user of the tool.
Tools are employed by a range of users, some more skilled than others. Hopefully, you are really good at making the tool itself.
The people who manufacture skilsaws may not be the world's best carpenters. The oven manufacturer isn't going to be a world-class bread baker. The people who sew baseballs don't pitch in the World Series. The fine arts paintbrush manufacturer isn't going to be Michelangelo. The movie camera manufacturer isn't going to be Steven Spielberg.
Sometimes the manufacturer will consult with the people who use the tools regularly, listen to feedback on what works and doesn't.
Sometimes the tool you make isn't good enough for a certain task, or the operator isn't good enough. You could work at the oven manufacturer, but at home you often burn the toast.
Some people are better tool makers than tool users. In this case, it seems like GT Advanced promised Apple that they could make a better tool and use it better than anyone else, but they did not do a sufficient job.
Do you think Clayton Kershaw or Miguel Cabrera would be the best people to stitch baseballs? How about your star Little League pitcher?
What happened to the “It’s all Apple’s fault” we were hearing from this outfit? What happened to the for-sure lawsuit that was coming?
Meanwhile there’s an article on Yahoo finance that warms the soul of any Apple follower. Seems IDC, the ‘research giant’ that is always making predictions of doom about Apple, underestimated last quarter’s Mac sales by almost a whopping 10%. Now questions are being asked about IDC’s research ability. Who’da thunk it?
I was thinking the same thing - if the underestimated rather than the usual grossly overestimated numbers analyst general publish then something must be seriously wrong. Besides that, making Apple look good can't sit well with the competitors who pay for the usual fraud perpetrated by so called industry experts.
i agree with that.
but i would put the blame on GTAT not Apple for that. GTAT was the expert on Sapphire not Apple.
The blame is on Apple. Apple admitted their process wasn't ready for production.
I'm confused. GT make the equipment then when they started actually using the equipment, they were not able to produce the quantity or quality needed. Is this correct? And if it is what does it say about GT.
Not correct, see above.
Quote:
At least Apple will make $439 million in profits every week of the four years it takes for GTAT to finally default on this repayment agreement. Then, GTAT will go crying to yet another judge about how mean ole Apple is yet again expecting them to honor an impossible agreement.
Uh no. The only money Apple is entitled to is from the sales of the furnaces. Even if it doesn't cover the $439m, Apple can not get it from GTAT.
"Apple will have a $439 million claim against the furnaces and will be paid solely through the furnace sales, GT Advanced Lawyer, Luc Despins said. No other claims will be made by Apple."
No, you don't lose a cent by holding on to their stock, but when they get delisted and it drops down to penny stock status, few people are willing to purchase it, so any expected value disappears.
In GTAT's case that is not true. People and lawyers familiar with bankruptcy proceedings are petitioning the court because they feel GTAT's stock still has value.
Thu Oct 23, 2014 4:28pm EDT (Reuters) - Shareholders of GT Advanced Technologies (GTATQ.PK) are lobbying regulators to form a committee to vouch for their interests in the sapphire maker's bankruptcy, believing their shares may still have value.
While shareholders are typically wiped out in bankruptcy, GT Advanced stockholders believe their equity may not be worthless. Some are reaching out to the U.S. Department of Justice's bankruptcy regulator, the U.S. Trustee Program, asking it to form a committee in GT's bankruptcy to represent shareholder interests.
According to a source close to the effort, law firm Brown Rudnick, which routinely represents creditors in big Chapter 11 cases, is drafting a letter to the Trustee on behalf of a shareholder group requesting a committee.
If you bought GTATQ less than 1 week ago, you would be up 150% today.