Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Apple's Sapphire Partner GT Advanced Technologies Files for Bankruptcy
- Thread starter MacRumors
- Start date
- Sort by reaction score
It may be rare but it happens. I have worked for one company where it worked and one where it didn't. It works if you business is solid to begin with.
The one where it worked went into Chap 11 because right after Sept 11, where a lot of companies stopped paying their bills. We had 70 million in receivables on the books but couldn't collect and therefore couldn't pay our bills.
The courts saw our receivables and not only did they agreed with us that our business was solid, but they forced the companies that owed us to pay up. It wasn't so much about our inability to pay our bills, but more that we needed to collect money already owed to us in order to be able to pay our bills.
Thats when Chapter 11 works. -
Debt holders are in first position in bankruptcy reorganizations. They may see part if not all of their money, assuming the company returns to profitability. Either way, equity holders are typically wiped out.
Sorry to say this, but yep, pretty much.
You'll have to keep an eye on the case to know for sure, but I wouldn't be hopeful. There's a chance the company could be bought and taken private, and no new stock issued. Or, creditors will get a debt for equity swap, and they will become the "new" equity holders with newly issued stock, and the stock you have now will be invalidated and worthless, or traded in for "new" at an extremely low value.
As an equity holder, maybe you'll get pennies on the dollar, or you might get nothing. Unfortunately, history does not bode well for stockholders on this. This is one of those risks investment managers warn people about when they trade in stocks (though admittedly, they usually do it in teeny tiny print at the bottom of things you sign).
A small part of me can't help to think GT Advance maybe wasn't able to produce the yield and quality expected by Apple and this is the reason it didn't make it into the iPhone6.
Is this an example of bringing manufacturing back in the US gone wrong??
Is this an example of bringing manufacturing back in the US gone wrong??
GT's market cap at this point is totally meaningless. Anyone who buy stock in a bankrupt company is just begging to be zonked because their stock becomes effectively worthless the moment they file for bankruptcy.
I am curious to see what happens to the $500M debt the company owes toward AAPL.
I think it's a matter of semantics here.
My guess is Apple already made the decision to go with Sapphire, and production had started. GT makes the rough Sapphire covers, and that sapphire would have to be polished down, and that curve on the side of the displays in the iPhone 6/Plus would have to be made, by contracted assemblers and finishers, probably at Foxconn.
The assemblers then started seeing yield and quality issues and probably had trouble grinding down the edges to make that curve, without cracking or shattering a whole lot of the sapphire covers.
To solve that issue with either a reformulation of the sapphire cover, or a different finishing process, would've taken "weeks," and Apple didn't want to wait weeks. Searching for options, Tim Cook places a call to Corning, who maybe rubs it in and then says that they can start rolling "ion strengthened glass" (which could be Gorilla Glass 3) immediately. For a price.
End result? Apple says "sorry, maybe next time" to GT, and places a huge order with Corning for the 6/Plus. Production continues with only a minor hiccup, and GT is left holding the bag.
Again, this is all speculation, but I think this is how it went down, and how the "weeks away" rumor started.
In a bankruptcy reorganization, debt becomes subject to a payment schedule ordered by the court. So long as they remain profitable, Apple will probably get their money back, or at least most of it, eventually.
Market cap is $111M ... down from over $1B. Apple can buy them with the same amount they paid U2 for their album.
Have fun. The odds are better on a slot machine, since that stock you are buying is worth nothing.
Thanks. Can technically AAPL use that amount to get the company? $500M of debt, $111M market cap (GTAT).
The problem discussing this topic is there are too many "maybes" involved. Maybe Apple watched one of those Sapphire videos where they tried to scratch it with cinder blocks and thought OMG! That's the BEST material EVER to use for the iPhone and then someone showed them the video of someone dropping it a few inches onto pavement and it shattered like so much garbage and they said! OMG! That will RUIN us!!! Frankly, I'm guessing it's something along those lines.
Look how much trouble those "bending" videos caused and they were just a few defective phones. Imagine the nightmare of a video showing shattering iPhones from 4 inches off the table would cause. The material currently seems unfit for a full glass cover for those reasons. It's a bad idea to even consider that material unless they can modify its molecular structure (like alloys for metal) to get rid of that shattering problem because let's face it, people drop their phones all the time. It probably has something to do with the fact that people can't put the damn things down (especially when driving) and eventually their hands give out and they just drop them.
In any case, I'm starting to honestly think the iPhone was the worst invention of all time and will eventually lead to the destruction of the human race as people get dumber and dumber as their phones get smarter and smarter. The masses can't even do basic math without a calculator. It's truly pathetic. Texting will be the death of proper speech, writing and normal social interaction. Movie theaters will crumble not because of giant home theaters, but because people watch movies on their phones now.... UGH. I'm starting to think Steve Jobs was the proverbial Miles Bennett Dyson character from T2 and the "network" that forms Skynet in T3 won't be desktops on the Net, but smart phones in people's pockets. They could defeat Skynet just by smashing their phones, but they can't bring themselves to harm their beloved devices so the human race is destroyed by cyborgs created by a super computer that isn't in some building somewhere like Universal Studios implies, but in the pockets of the human race! LOL.
Of course, once the cyborgs destroy all the humans, Skynet is destroyed as well since the phones in their pockets (if they aren't damaged when their human masters are shot) won't get recharged. Arnie would be spending all his time trying to gather all those phones up and keep them charged....
More than likely, Apple was hard at work at making Sapphire stronger/less susceptible to shattering. I only think so because they spoke of doing this with the aluminum Apple Watch, as well as the gold 18k watch (I forget how much stronger the aluminum is, but the gold is said to be 2x stronger than regular gold. Necessary, since gold can be such a soft metal.) If they were worried about the metal hardness on the watch, they thought about the hardness of the sapphire on the watch as well. Undoubtedly on the phone as well.
Anyway, you already mentioned Apple doing this with metals, so you're aware of this. I just think it would be too much of a common sense thing to miss about Sapphire until the last second. A previous rumor article on here said that GT's sapphire displays yields were only about 25%, a very low number for such a big launch. Who knows what the reason for the low yield was. But too low of a yield to go with it.
I mostly wanted to reply because I enjoyed the second half of your message as well. I love my Apple products, but I do feel it is taking up so much of my time using them and dumbing me down some. For myself personally, I want to try and be more proactive and productive with free time, instead of defaulting to my iPad for media consumption. I need to re-think which ones I own and how I use them. (Meanwhile, here I am posting about Apple stuff.
)
I doubt it. I think this is probably more of a new mass production technology not working as well as expected.
Fair enough. But one example hardly equates to "and everyone (almost) gets paid back over time."
So Apple basically has GT Advanced Technologies sign an exclusive agreement that they will only produce saphire for Apple's rumored iPhones and Apple Watches over the next five years at a high volume capacity, thus limiting GT's partnerships with virtually any other potential clients. Then GT suddely files for Chapter 11 bankruptcy due to not enough business continuity/cash flow.
http://investor.gtat.com/releasedetail.cfm?ReleaseID=804195
Did Apple inadvertantly screw their business partner by having them sign this exclusive contract? Should Apple at least explore a possible buyout of this company or at least license the tech?
Mixed feelings about Apple's business practices at times.
I'm not sure that's really what has happened. It's more likely to achieve apples demand GT were forced to excerpt all their efforts into sapphire production. It was a risk they entered into knowing the risks. They're not going out of business that's not whats happening here. Hopefully GT advance shouldnow be a top tip for investment as their stock could skyrocket next year with apple watch and next iPhone. You never know.