Apple Trying to Help GT Advanced Meet Milestones, Holds Off on Asking for Loan Repayment

[itjw]

Sounds like GT did this without anyone including Apple having a clue, and that's really shady business for a company that took hundreds of millions in loans, exclusivity or not.

They made promises they couldn't uphold, that much is pretty obvious at this point. I'm sure Apple was a bear to deal with, and I can only imagine that yields GT thought were "good enough" were quickly destroyed by Apple.

And with good reason.

Can you imagine the damage faulty sapphire would have caused? Or even if it was flawless, can you imagine how constrained supplies of devices like the + would have been if there was only HALF the inventory they have currently? That's assuming the yield rates were half as good as gorrila, and I don't think that's even the case...

The rumors I heard was that it was much more brittle than they anticipated, and was not doing well in stress tests. They also had a very hard time with the quantity Apple wanted, and asked for extensions on several occasions even on the "test" batches because of difficulties.

We can thank Apple for pulling the plug, or else we'd have 50 threads on "SapphireGate" lol.

Good riddance GT. Don't write checks your butt can't cash, and definitely don't neglect to tell the one person that COULD bail you out that you're pulling the plug behind their backs. They'll be chopped up and gone in a year...

 

[jmpage2]

Hold up. Apple are the reason GT are in this mess.

Apple: "we will loan you $500m for new equipment to make sapphire for out phones"

GT: "ok"

Apple: "you can't sell the sapphire to anyone else, only us"

GT: "ok, we will give you exclusive access because of the loan."

Apple: "we don't want your sapphire now, and you aren't allowed to sell it to anyone else."

GT: "WTF! How are we supposed to make money?"

You missed a line or two;

Apple: "Your sapphire is not meeting requirements laid out when we met about this and infused you with cash a year ago".

GT: "errrrr".

 

[rdlink]

$500 million is quite literally PETTY CASH to Apple. It makes you wonder why they can't hire more people to actually get their entire Mac lineup out the door on time for updates (e.g. The Mac Mini hasn't had an update since 2012).

Oooh, I don't know. Maybe it's because they'd rather spend that labor costs on a product that's their cash cow, instead of a minor product in their lineup.

You realize, don't you that they sold more than twice as many iPhones on opening weekend than they did Macs total last quarter?

 

[Sonmi451]

This stock is so low, I kinda want to buy up a bunch. I think people dumped this stock a little prematurely.

 

[macUser2007]

You missed a line or two;

Apple: "Your sapphire is not meeting requirements laid out when we met about this and infused you with cash a year ago".

GT: "errrrr".

And you a whole bunch of other posters blindly defending Apple missed the part of the agreement where Apple owns the Arizona facility, GT supplied the furnaces, the knowhow and the employees. Apple made a pre-payment and GT agreed to an exclusive supply deal.

Apple reneged on their plans to use the product, by some reports because they discovered that while sapphire resists scratches much better than ion-strenghtened glass (Gorilla glass), it is also more brittle and as implemented in the devices, it shattered easier in drop tests. This does not mean that the product is not good, it only means that it is not suitable for the purpose Apple was attempting to use it for.

The exclusive bit in the deal means that GT is not able to sell the production to anyone but Apple, yet Apple decided not to use it as intended.

The fact that Apple was surprised by the filing indicates that Apple tried to bluff GT by withholding the final payment and GT called Apple's bluff. If Apple was really trying to help GT, we would not be hearing of this.

 

[elvisimprsntr]

GT can always switch the facility to making Meth. It's probably more profitable. They can hire Walt, Jesse, and Gus to run the operation.

 

[TT D'arby]

This is all good news for GT and shorting the stock may no longer be optimal in this tech climate. Apple will probably do a 4:1 buyout but I wouldn't be surprised to see 5:1 with the massive losses on GT's bottom line. Good write-off for GT for the fiscal year but expect some stagnation in 2015 while they downgrade their furnace proposals (especially considering the quasi-exclusive contract they have with Apple).

 

[gnasher729]

"s part of its loan agreement, Apple was entitled to ask GT Advanced for repayment if its cash holdings fell below $125 million, but Apple has opted not to demand repayment."

If they don't have the money, then why ask?

Something still sounds a little weird on this deal.

Bankrupt means they don't have enough money to pay everything they owe. It doesn't mean they have no money at all. Actually, you'd want to get any money owed to you as quick as possible, before all the money is gone.

 

[Mr. Retrofire]

Apple, aware of GT's weak cash position, also reportedly held off on asking for loan repayments on the $439 million GT has received so far.

I did not expect this in our world. On the other side, Apple obviously recognizes how much money and power they have, and that a weak partner can have a strong influence in the future, if he is stronger than now.

----------

to GTA ceo...apple will grind you.

On the contrary.

 

[StyxMaker]

How is this integrity? Forcing them into an exclusivity deal is part of the problem.



if they had been allowed to provide product for other suppliers they may have been able to stay solvent without having to cheat by going through Chapter 11.

So, you think they should be able to make sapphire in a facility Apple paid for (and owns the building) and sell it to other people. Their core business is manufacturing and selling sapphire furnaces, they are still able to sell those to whoever they want.

 

[Crzyrio]

And you a whole bunch of other posters blindly defending Apple missed the part of the agreement where Apple owns the Arizona facility, GT supplied the furnaces, the knowhow and the employees. Apple made a pre-payment and GT agreed to an exclusive supply deal.

Apple reneged on their plans to use the product, by some reports because they discovered that while sapphire resists scratches much better than ion-strenghtened glass (Gorilla glass), it is also more brittle and as implemented in the devices, it shattered easier in drop tests. This does not mean that the product is not good, it only means that it is not suitable for the purpose Apple was attempting to use it for.

The exclusive bit in the deal means that GT is not able to sell the production to anyone but Apple, yet Apple decided not to use it as intended.

The fact that Apple was surprised by the filing indicates that Apple tried to bluff GT by withholding the final payment and GT called Apple's bluff. If Apple was really trying to help GT, we would not be hearing of this.

They did not use it as intended because GT did not deliver what they promised.

This isn't all just GT's IP, apple licensed them some of their patents or something if I am correct.

GT as it is was not making to many sales, operating in loss for the past 3-4 years and a expected revenue of mere pennies this year with the help of Apple.

 

[UpperQuadrant]

I know a guy who worked at Enron. He was just about ready to retire when the scandal broke, the stock crashed, and a huge chunk of his investments went up in flames. These are the kinds of real people that get hurt in the shuffle. I'm not saying anyone did anything against the law, but real people, hard working, loyal to their company, can't expect that same loyalty back anymore.

Well, there is not 100% guarantee when it comes to stock prices. I know it sucks, but hopefully the company will get out of Bankruptcy, since it's only 11, not Chapter 13, which is worse. Plenty of companies have gone Chapter 11 and been successful afterwards. If you think Apple's going to stick with this company and you think it's going to come out of it, then the stock is CHEAP. Some might look at this as a buying opportunity.

As far as investors, there is always the court with a class action lawsuit against the company management.

The thing is don't put all of your investment eggs in one basket, I know it's hard for people to adhere to this, but in order to protect yourself, you have to be diversified, otherwise don't get your money wrapped up into individual stocks, which is why Mutual Funds exist for those that want to invest in a diversified portfolio on a more limited financial budget. These small companies are typically high risk in the first place and this is potentially what can happen, so if you don't have the stomach for this, then don't rely on small company's stocks.

I've worked for small companies where they entice people into thinking the stock is going to worth tons of money someday, even though it never does become worth anything.

 

[Gutwrench]

This stock is so low, I kinda want to buy up a bunch. I think people dumped this stock a little prematurely.

If you have a few thousand dollars that you don't care to lose, go ahead. Be prepared to lose though. Many C11 companies don't make past six months or have their plan approved. GT might.

A few years ago I tossed away $3000 on a C11 company. Their EBITA never improved and the stock continued to fall to below $20, then below $10, to finally below $1. They were warned, then delisted.

(Eventually it was purchased by a company to the expand its footprint, but that doesn't matter.)

 

[Crzyrio]

How is this integrity? Forcing them into an exclusivity deal is part of the problem.

if they had been allowed to provide product for other suppliers they may have been able to stay solvent without having to cheat by going through Chapter 11.

They weren't forced, Apple said they would give them a sizeable amount of money to develop something very specific for their needs. GT had the right to negotiate or refuse this deal if found appropriate.

Apple provided them with the $$, license and some of their expertise. Why should GT be allowed to use that to service other customers ?

 

[StyxMaker]

Why would you sign an exclusive contract with a company with no guarantee they would buy your product? I don't care if it's Apple and I don't care if they're trying to do the right thing. Maybe GT was blinded by dollar signs and promises of massive wealth, but I would have a hard time signing a contract so heavily weighted against me.

Since their core business is making the furnaces, not the sapphire, they may not have realized how difficult it would turn out to be.

 

[UpperQuadrant]

All I can say is this.

The CEO has about 170,000 shares so his own value in the company went down from $1.7 Million to $170,000 if he was to sell all of his shares at market price, which he legally can't. So, he's not exactly THRILLED about this either. the 5,000 shares he just sold he only got $55,000 which isn't enough to seek shelter in another country and retire.

So, time will tell how this pans out. If Apple's sticking with the company and they feel they will get out of this and emerge a successful company, then maybe this is a buying opportunity to get shares at $1 and maybe they'll go to $11 a share back to normal within a year. Anything is possible, but this is not a Chapter 13 Liquidation of all assets in the company, this is Chapter 11, which is corporate restructuring. So, it's possible to come out of this and get back on track again.

 

[StyxMaker]

I know a guy who worked at Enron. He was just about ready to retire when the scandal broke, the stock crashed, and a huge chunk of his investments went up in flames. These are the kinds of real people that get hurt in the shuffle. I'm not saying anyone did anything against the law, but real people, hard working, loyal to their company, can't expect that same loyalty back anymore.

Anymore?

 

[Hitch08]

This is all good news for GT and shorting the stock may no longer be optimal in this tech climate. Apple will probably do a 4:1 buyout but I wouldn't be surprised to see 5:1 with the massive losses on GT's bottom line. Good write-off for GT for the fiscal year but expect some stagnation in 2015 while they downgrade their furnace proposals (especially considering the quasi-exclusive contract they have with Apple).

What?

 

[Gutwrench]

If Apple's sticking with the company and they feel they will get out of this and emerge a successful company, then maybe this is a buying opportunity to get shares at $1...

I'm not following GT's financials or this story, but are you serious? Is GT anywhere near $1?

It's only my opinion, but if it's anywhere near $1 I'd rather risk $1000 on craps or a dinner rather than watch it disappear in 90 days. Is the thirty day $1 rule suspended or something?

 

[mdlooker]

Apple is definitely not hurting for the cash so that 439 million may come back in a richer form down the road.

There's definitely more than a Good Samaritan thing doing on here IMO.

 

[rkuo]

They weren't forced, Apple said they would give them a sizeable amount of money to develop something very specific for their needs. GT had the right to negotiate or refuse this deal if found appropriate.

Apple provided them with the $$, license and some of their expertise. Why should GT be allowed to use that to service other customers ?

GTAT may have taken on onerous terms, but it's also on Apple to make sure their own whims don't destroy an entire company. Not only does it severely damage the prospects of Apple getting other smaller partners to work with them in the future, but they showcased this partnership as "bringing jobs to the US". This would be like asking someone to quit their job to come work for you, moving them cross country and making them sell their house and buy a new one in the area, and then letting them go after four weeks.

With that said, we don't know what happened yet, but we'll know a lot more tomorrow.

 

[StyxMaker]

I'm not following GT's financials or this story, but are you serious? Is GT anywhere near $1?

It's only my opinion, but if it's anywhere near $1 I'd rather risk $1000 on craps or a dinner rather than watch it disappear in 90 days. Is the thirty day $1 rule suspended or something?

Earlier today I read that GTAT had gone up to $0.95.

 

[kerrikins]

Hold up. Apple are the reason GT are in this mess.

Apple: "we will loan you $500m for new equipment to make sapphire for out phones"

GT: "ok"

Apple: "you can't sell the sapphire to anyone else, only us"

GT: "ok, we will give you exclusive access because of the loan."

Apple: "we don't want your sapphire now, and you aren't allowed to sell it to anyone else."

GT: "WTF! How are we supposed to make money?"

From the article:

GT has not yet received the payment because it has reportedly failed to deliver on the technical milestones that it was contractually obligated to meet under the original terms of the $578 million loan that Apple provided for purchasing equipment.

Yeah, Apple is totally the bad guy here.

 

[annieBacini]

How do you...

blow $439 million?

 

[Sonmi451]

If you have a few thousand dollars that you don't care to lose, go ahead. Be prepared to lose though. Many C11 companies don't make past six months or have their plan approved. GT might.

A few years ago I tossed away $3000 on a C11 company. Their EBITA never improved and the stock continued to fall to below $20, then below $10, to finally below $1. They were warned, then delisted.

(Eventually it was purchased by a company to the expand its footprint, but that doesn't matter.)

I don't know about thousands, but maybe a single thousand. As long as you spread the cash in various investment risks, you should be okay. I do think they have a chance to bounce back, or at least improve the stock a little.