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Apple Surprised by GT's Bankruptcy Filing, Considering Next Steps
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The stock price has almost nothing to do with the operations of a company with the exception of when you try to raise capital from the market. In that case, it only means that if the price of the stock goes down, you have to offer more shares of stock to get the same amount of cash, diluting the value of the current stock holders holdings.
Imagine if Apple stock today became only worth $1. Would Apple have to declare bankruptcy? No, because they have plenty of cash on hand and run a profitable business. It would make the executives sad because their compensation is based on stock, but it would not prevent them from operating the way they always have.
Most likely what happened is that GT expected to sell millions of screens and when Apple didn't purchase them they realized that they wouldn't have cash flow to operate. Bankruptcy allows you to not pay your creditors while you reorganize your company to again operate in a profitable way.
But that's how Wall Street works. Buy on the rumour sell on the news. This is why I don't trust the markets. Nobody takes into account fundamentals any more. It's all pure hype, spin and speculation. Might as well stick your money on the roulette wheel instead.
Again, when was this more than a rumor? Not trying to be confrontational, I just don't recall seeing any confirmed report of Apple's plans on Sapphire screens.
Yes, even including GTA's own CEO who was reportedly selling off millions of $$ in shares since the summer. (Doesnt seem that he had much faith in being able to deliver.)
Under a decently designed bailment agreement, Apple probably already owns it.
"The market" has nothing to do with a bankruptcy. You go bankrupt if you can't pay your bills. Your share price goes up or down if "the market" thinks you are doing well or badly. But what the market thinks doesn't affect your cash in the bank.
Apple is giving them loans and helping them invest in a sapphire plant. Of course, it was expected to result in apple ordering more sapphire products.
I think the problem was that GT's product was not ready and Apple wasn't waiting with the iPhone 6 release until they are ready.
Apple has to decide now what they want (do they want Sapphire Glass screens for all iPhone 6 and possibly more devices or not) and how to get it. Apple is probably the largest creditor of GT. They can give more money, they can buy whatever goes on sale, they can buy the company.
Never confirmed, but the evidence here suggests that GT was expecting to sell sapphire and Apple changed directions late in the game. It could have been GT's fault because of poor yields. But this add credibility to the rumors that Apple was planning and then changed course.
Apple needs to step in and buy them is what their bankrupcy filing is trying to tell them. Either buy us or forget it. I bet they will and run GTAT iron fisted and get full supply to the sapphire for the next iphone. Just hoping my last 1000 shares i left for posterity get upgraded to 1 apple share when they do.
Just listened to the August 2012 investor conference call.
Someone asked the CEO what effect it would have on the company if Apple were to withhold the final $139m October payment.
The CEO said basically (a) Apple will have to make the payment if we meet the targets in the contract, and we will meet those targets and (b) even if they don't make the payment, GT would have $400m in the bank "so it wouldn't be a world-changing event"
http://www.media-server.com/m/p/n57pdmg5 - 29 mins in
Apple to acquire GT Advanced furnaces
http://blogs.barrons.com/techtrader...d-says-susquehanna/?mod=yahoobarrons&ru=yahoo
http://blogs.barrons.com/techtrader...d-says-susquehanna/?mod=yahoobarrons&ru=yahoo
I agree with you there. Nothing confirmed, but circumstances would lead one to believe Apple was planning on using GT's sapphire. It may be a while before we know what really happened in that situation.
Slight tangent shift: There are many comments in this thread regarding Apple buying GT outright. What if they do? How will that change the rumored yield issues? IIRC the issue wasn't a shortage of sapphire from GT, the issue was getting acceptable yield from the cutters. If that's the case, it doesn't matter how much sapphire Apple gets if it can't be cut to get sufficient yield.
Seems like GT went all in with pocket kings and took bad beat.
I think that was ultimately the problem. They could not deliver the amount needed, so apple decided to skip sapphire.
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Is the proof not in the pudding? Apple loaned them money, and they signed an Exclusive deal to produce sapphire only for apple.
In part it seems it was their own fault, as they were not able to commit to produce the supply needed within the timeframe.
Apple has three choices:
- Risk to loose the money already invested in GT as a loan, or
- Buy what's left of GT and rebuild the company (unless Apple now considers Sapphire Glass is not the right material anymore).
Actually, the rumors were that the yields were too low.
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Do you know that "may" and "to" are not the same word?
That would leave GT with little resources to reorganize and continue as a company,
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Maybe the poster works or used to work for a newspaper or a news agency, hence the "to" instead of the "may": it sells better!
I think it is highly unlikely that GT was in the dark regarding Apple's plans for iPhone displays.
So you both are under the impression that Apple built this multi Million dollar Facility, and loaned GT Advanced Millions in funding to start operations, all without telling them what they will be building? I Guess it is possible, however I don't see the benefit to Apple to withhold such information, even with them doubling down on secrecy.
Since they are still likely under NDA, it may be some time before we know exactly what happened with plans, but for all we know, the factory is for producing watch screens, existing Sapphire needs, and potentially other future (yet unannounced) products.
Apple has existing products with Sapphire in them, the Watch is announced to have it, and none of us know what future products will feature it. All we do know, is the iPhone 6, and 6+ currently do not have screens featuring Sapphire.
Blood on Apple's hands here?
Some might be quick to examine Apple's hands for blood, but I wouldn't be so quick. Had GT been able to supply enough of the stuff, the iPhone 6 might have used it. But that's 80m phones and enough extra for scrap...coming from an operation that only earlier this year was still being built. Yields, as others noted, were probably way too low for inclusion into the iPhone 6 (and maybe even next year's 6S). But the iPhone 7 seems a good bet. I think GT has the know-how and the science down to the point where Apple will want to keep the alliance going (and to keep supply out of other hands). But the bankruptcy filing leads people to screech: "Look what big, mean Apple did to that poor little supplier! Bullies!!!"
Some might be quick to examine Apple's hands for blood, but I wouldn't be so quick. Had GT been able to supply enough of the stuff, the iPhone 6 might have used it. But that's 80m phones and enough extra for scrap...coming from an operation that only earlier this year was still being built. Yields, as others noted, were probably way too low for inclusion into the iPhone 6 (and maybe even next year's 6S). But the iPhone 7 seems a good bet. I think GT has the know-how and the science down to the point where Apple will want to keep the alliance going (and to keep supply out of other hands). But the bankruptcy filing leads people to screech: "Look what big, mean Apple did to that poor little supplier! Bullies!!!"