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GT Advanced COO: Apple Told Us 'Put On Your Big Boy Pants and Accept the Agreement'
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There is no sharing of the blame? Bankruptcy was due to free cash-flow problem due to management error/negligence.
Again, GTA did not "waste time in months or years" at all. That time was all on someone else's dime. In most cases in Supply Chain agreement, it would be the supplier's dime.
What are you talking about?
They had a 2 billion dollar market cap when it started so I am guessing they at least a few people. They made $500 million off their IPO in 2008. Maybe they should have hired a lawyer.
"What are you talking about?" You said this one at least twice.
"And???" Open ended non-question designed to mock the person you're debating.
These are tired old debate tactics. You're obviously interested only in "being right" at all costs here, and not hearing anything that somebody else has to say.
I stated my opinion and I think I did a pretty good job of it. I refuse to be rude back to you, and I refuse to play your game.
You're blurring business decisions with personal opinion.
Apple was the buyer in this relationship and GTA was the SUPPLIER!
There isn't a "Clearly Apple thought they could make it work so they didn't listen." and "Business is all about making decisions. Sometimes cutting corners works and saves lots of money. Sometimes it blows up in your face. " where the buyer is responsible.
What GTA did or the negligence in the way GTA executives managed their free cash-flows is completely irrelevant.
Thinking that a purchaser (company a) has responsibilities over supplier (company b) is not reality. For this to be true, company B wouldn't be a company - but a division or an internal department of company a.
What are you talking about?
They took a risk and it failed for them. It has nothing to do with being scared of rejecting Apple. If a small company like Dropbox can do it, I'm sure anyone else can do it. Both companies thought they were getting the better deal or why make the agreement? If their excuse is that they got bullied, then they deserve to go bankrupt and be forgotten.
You're blurring personal opinion with business.
This was a business supply chain/BoM contract between 2 separate external entities. There isn't any shared liability/responsibility in supplier relationships. PERIOD
That is reality.
Anything else is just personal opinion/judgement.
I am sure the shareholders would have preferred to lose faith instead of all the money they lost...
What are you talking about "pressure GT into signing the contract that had a very high chance of ending badly for GT"??
This was supply-chain/supplier relationship! GTA produces components for Apple. What does Apple have to with their GTA & their negligence managing their financing? Why would Apple be at all responsible for any of the supplier's risk? They're an EXTERNAL company supplying components.
There's 2 parties here. Both entered into an agreement with agreed upon requirements and THEN signed a contract.
This is basic business.
I'm not saying Apple didn't play hardball. Of course they did. However GTAT were quite within their rights to refuse the deal. At the end of the day, GTAT's management and board of directors had the responsibility to run GTAT, Apple didn't.
I love these these folks making statements that GT could have just walked away when Apple came a knocking. All these folks saying that they were greedy etc. the same folks who only have hear a little Apple magic and they run off in their millions, queuing for days buying average products at over inflated prices, often without ever seeing them. Then they try and tell us that Apple never applies any undue influence.....yep all these pocket CEO's on this thread would have definitely walked away had Apple come knocking at their door.
This does not make any sense at all. A contract isn't valid until both parties sign. And a final contract is only drafted until after ALL NEGOTIATIONS and stipulations have been agreed upon by BOTH parties on fair terms for BOTH parties.
Once all negotiations are agreed upon, the contract is signed. And only then does the DEAL begin.
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What are you talking about? Both parties talked, then negotiated, then agreed upon an agreement suitable for both parties, and then signed a contract. During negotiations before legal contract is signed - it's completely normal for any party to disagree, ask for changes, and/or walk away.
What are you talking about "couldn't walk away?"
It was already ugly. These guys **** down their business and fired everyone.
Do realize that in addition to these demands, Apple didn't RELEASE the second $100m of loan funds ($430m) on time. almost 90 days late (which is destructive by itself) and when the company pulled the trigger for bankrupsy Apple had not released the final loan payment of $130m to them. That's AFTER GT already bought all the stuff and set up shop with "Apple's" money... Almost half the advertised loan never got to the actual business..
GT made the correct call. It was a bad deal, Apple left them technically bankrupt sitting on promises with no orders booked (and no sapphire iPhone or Watch for six months) GT saved Apple $130m fm the loan it didn't have to pay out. They could have took the money and failed bigger... But they "put on their big boy pants" and closed down a bad deal.
Did you actually read the Declaration? That's not at all what happened. https://www.scribd.com/doc/245860947/GT-Apple-doc-November-7
You haven't a clue what you are talking about. Companies can spend millions developing a contract, foregoing other customers (a condition of this contract) and you can easily end in a place of no return; it happens everyday and is actually a stable method of contract negotiation , I.e get your vendor or customer into a place of no return before they get you into one.
Exactly, because of Apple's strict policy--like not being able to use the furnaces for other companies--and the amount of resources were dedicated to the Apple project, GT was in essence acting like a division of Apple more so than an independent company.
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That isn't true at all. Contacts can be enforced if all the major issues have been decided even if minor ones still haven't been finalized and the deal not signed.
Regardless you are missing the main point.
Again blurring personal judgement with business.
This completely normal and regular to require that supplier company not use same materials/resources in producing non-commodity components for competitors! Again why would anyone think otherwise?
How is it justified for supplier to then build a specialized component or use specialized process for a competitor?
This is standard in any supply-chain/BoM agreement for non-commoditized components.
Lastly and most important: Apple fronted the money for said equipment! This gives them more say over the equipment they paid for.
I hate it when Apple puts a gun at the head of their supplier to sign a contract that is so bad for the supplier.
Gotta love it when I can recycle. In this case, it is a comment I made previously...
No they can't. If no contract has been signed - there isn't a legally binding agreement.
What are talking about?
The main point is GTA THE SUPPLIER. Bankruptcy was a free cash-flow problem resulting from negligence in managing their finances. PERIOD.
There isn't a shared responsibility between the 2 parties at all.
This absolutely does not make any sense in the business/finance world at all.
Apple was not "late" in payment. Late means default. GTA would immediately a judgement placed on Apple & it's assets until they're rightfully paid. Apple defaulting on a payment would be a major market event considering it's size (secondly they have a tremendous amount of assets that if a judgement was rendered, GTA would be paid promptly via escrow). Not only would Apple's credit worthiness collapse it would spark panic in the market that other companies are vulnerable too.
Again, this was a standard supplier Supply-chain/BoM relationship and contract. Supplier must deliver components in the agreed upon set quality standards & quantity to the buyer - and only then is the supplier paid. If supplier fails to produce components at standard, why would a buyer pay them? Product was not delivered.
Also remember that the materials used to manufacture components - was purchased with moneys that Apple fronted. It was on Apple's dime. Usually, it would be the supplier's dime.
This is nothing new for large powerful companies.. Walmart is a client of mine at my job and it's their way or they will find someone else who will.
They were strong-armed!
They were the supplier! What are you talking about?