But it's not the same! Apple have the money to buy the equipment, they can get their money back by selling that equipment. A better example would be you giving money to buy a coffe machine, not getting the coffe you expected and selling the machine back.
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GT Advanced Saw Production Troubles as Early as February
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But it's not the same! Apple have the money to buy the equipment, they can get their money back by selling that equipment. A better example would be you giving money to buy a coffe machine, not getting the coffe you expected and selling the machine back.
Please forgive me. Semantics aside, I'm not sure how your comment relates to mine. Not sure how my comment relates to whether or not GT is a manufacturer or the screens are their product.
I was responding to Makosuke's omission of the other details regarding that relationship. Specifically the crappy terms in the contract. Don't get me wrong, I have no sympathy for the mgmt of GT and I've stated in previous posts they signed the deal with eyes wide open (see post 96). No matter the terms, GT agreed to them. Stupidly agreed, but agreed nonetheless.
This whole news makes me mad!!!
Why, this seems proving US cannot operate advanced technology manufacturing.
On the other hand, I was happy hearing Apple making Mac Pro on this land in the US. Mass production of an advanced technology is a total challenge. It requires ideas, planning, management, funding, capital investment, labor and enthusiasm. This winding request is a clearly and example of failure.
Insider trading or not. It is a shame that CEO sold his own company's stock and turn a bunch of paper in to a local authority. I can hear entrepreneurs in eastern Asia are smirking.
I am mad!!!!
Why, this seems proving US cannot operate advanced technology manufacturing.
On the other hand, I was happy hearing Apple making Mac Pro on this land in the US. Mass production of an advanced technology is a total challenge. It requires ideas, planning, management, funding, capital investment, labor and enthusiasm. This winding request is a clearly and example of failure.
Insider trading or not. It is a shame that CEO sold his own company's stock and turn a bunch of paper in to a local authority. I can hear entrepreneurs in eastern Asia are smirking.
I am mad!!!!
The ones who bought their equipment from GTAT and and are having issues with them and want their money back?
Or the ones who ordered over 360 pieces of equipment and only received 150 of them and now can't get anymore?
These guys are classy...
"Moreover, GTAT has signed contracts with Chinese companies through an affiliated company in Hong Kong instead of in its own name, which would mitigate its responsibility in the event of legal action."
This is an old story, stop me if you're heard it before
>> Gutierrez also sold off stock throughout the year,
>> netting more than $10 million before stock prices faltered
Good to know that the rats were getting themselves
off the sinking ship in style. (Textbook insider trading?)
>> Gutierrez also sold off stock throughout the year,
>> netting more than $10 million before stock prices faltered
Good to know that the rats were getting themselves
off the sinking ship in style. (Textbook insider trading?)
What deal are you talking about?
The details we have are limited, certainly not enough to make the assertion you have made.
Apple made a deal to lose them money in four installments if they met certain milestones during development. These sorts of SLA's are very common in business deals and given this was beyond just a purchase order but a sizable loan to fund this build out, no it was not crazy.
It was only crazy if the GT execs knew they could never meet these milestones. Getting a 400 million dollar loan always comes with a lot of strings, so that is not a surprise in the least.
Apple is the one who got screwed here not GT. It is unlikely Apple will see much of their 300 million back, although someone mentioned earlier that the sapphire furnaces were put up as collateral for the loan.
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Why would throwing out the ndas put them in business with Samsung? There is little chance GT is coming out of bankruptcy as a viable company. The NDA with apple being revealed does not impact that at all.
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Yeah I don't think you understand how business and depreciated assets work.
Even if apple had a lien on all the equipment, it is unlikely that would return them the amount of money already loaned. Not go mention apple would have to make a significant investment to actually use the equipment themselves. This is extremely specialized equipment that depreciates the instant it is purchased.
At some point in the process you have to decide to trust your partner so it is certainly possible to be deceived and surprised. Apple would never have made the deal if they did not think GTA was capable so there absolutely was a point of surprise for apple.
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That makes zero sense.
Oh thank God! I was beginning to think we weren't going to get anymore of these pointless GT Advanced stories.
Phew!
I think there's plenty of point to these stories. Starting to become a compelling story.
But having said that, I believe the interest is moving beyond Macrumors. This story has much more reason to be covered in the legal trades and business journals. This is really starting to smack of a nasty insider trading case.
Either Apple is going into the sapphire business with their new found assets from BK GT, or they are going to walk away and stick with gorilla glass.
$300m down the drain [sucking sound].
Rocketman
$300m down the drain [sucking sound].
Rocketman
I'm also saying to you I can choose not to buy your product if I don't want to do so. Oh yeah, even if I don't buy it, you can't sell it to anyone else either. If you work with me, I will be your only customer (when I choose to be, because remember, I'm not obligate to buy anything from you). Did I mention you can't sell to anyone else?
Couple what you said + what I said, then you get the full deal. Would you seriously consider it still? Not judging, just askin'.
Remember, prior to this arrangement with Apple, GT didn't actually sell sapphire. They sold the equipment *used* to produce sapphire. The only restrictions on who they can sell to, were that they couldn't sell the *sapphire*, produced in Apple's factory (full of GT equipment, and staffed by GT employees) to anyone but Apple. They could still sell *equipment* to anyone else.
I was specific when I mentioned the Moon Watch, which uses Hesalite. Sapphire is not space flight rated.
http://www.omegawatches.com/collection/speedmaster/moonwatch/professional/35705000
Yes, I would. Again, the payoff is spectacular--you would be the primary, perhaps exclusive supplier of cover material for the most popular electronic device on the planet. Which is likely to push other device manufacturers to want to buy your furnaces as well (which Apple's agreement did not prevent them from selling--it was only product from that factory). You could well end up being the primary supplier of screen production hardware for high-end smartphones worldwide--the next Corning.I'm also saying to you I can choose not to buy your product if I don't want to do so. Oh yeah, even if I don't buy it, you can't sell it to anyone else either. If you work with me, I will be your only customer (when I choose to be, because remember, I'm not obligate to buy anything from you). Did I mention you can't sell to anyone else?
Couple what you said + what I said, then you get the full deal. Would you seriously consider it still? Not judging, just askin'.
The potential for that massive payoff is what caused their stock to increase in value by a factor of 600% between April 2013 and April 2014, so obviously a lot of people other than the GTA execs thought it was a bet worth taking. Not to say stock buyers are sane, rational risk-takers, but they were clearly not alone.
All this, of course, is predicated on your technology kicking butt--if you're confident in your product and technology, and believe that the company in question (Apple) would be a fool to not use it, then that risk might seem reasonable. Particularly when you add in that not buying your product wouldn't be just a random decision--they would have just dumped half a billion dollars and a new building into a company that by definition they'd be getting no return on, since it would be more or less guaranteed to be going bankrupt and angry on top of it if they don't buy anything; it's not a big guarantee, but it's not nothing.
So if I truly believed that my technology was completely awesome, and I could meet the production goals being asked for by the overweight partner, yes, I might go for it. You're betting the company, but that's how you strike it rich in the big leagues.
Or, if you sell your stock while it's flying high on rumors once you realize you're eventually going to fail to meet obligations, you personally cash out a million bucks and bail on the agreement through Chapter 11.
What happens if Apple decides to go with Gorilla Glass in their next iteration of product because it's new formula provides better performance at a substantially lower cost? Or Dragontail increases it's ductility and hardness at a lower cost? You're back in the same boat. You're always in that boat.
I guess I would have more aversion to the risk. Primarily because of the people in my employ, but also being tied to one company, Apple or not, does not seem appealing. We differ in opinion and that's okay.
You're completely screwed in that case, no question about it, although Apple also just wasted half a billion dollars (plus they would be stuck with a building they have no use for) so they're not exactly going to make the decision lightly or based simply on a slight price difference.
You're risk-averse. That's fine. It's sensible. I tend to be, too. Generally speaking, that will lead you to a comfortable place in life and keep you from being hated. It will also usually keep your employees working, which is a very good thing.
On the other hand, people very rarely get handed a possible opportunity to effectively expand their business by a large multiple practically overnight. For some people--I would hazard to say, the kind of people who end up being CEOs of tech companies--they're likely to take those chances. A lot of the time they fail, sometimes catastrophically. Others, you get a Facebook or an Apple or a Google.
I'm really not going to make a value judgement one way or the other--it depends on circumstances and where you and your company are in life.
One other thing to take into account that I hadn't even realized before: I have no idea what the detailed financials of GTA are, but if you look at their annual financial statements, in 2011 they grossed about $900M with a profit of $175M; in 2012 they grossed $955M with profit of $183M; in 2013, they grossed $298M and came up $82M in the hole--a precipitous 70% decline in gross revenue. Part of their shortfall was due to increase in R&D spending, but there was also a drastic falloff in sales in 2013. Q1 2013 (six months before the Apple deal) was, in fact, pretty much the worst quarter they had ever reported.
It's not like that had to do with the Apple deal, either--if you look at their quarterly statements, the three quarters leading up to the one where they initially announced the Apple deal were dismal from a revenue standpoint across the board. Their stock in mid-2013 was also down to under $3 from a high of $17 less than 2 years earlier--the lowest it had been since shortly after their IPO--which for most companies would be considered rather brutal.
It could have been a temporary downturn, but losing 2/3 of your sales is a pretty big downturn. That sure looks like sales were already in relatively bad shape at the point they got on board with Apple, which would make the prospect of a risky but potentially lucrative contract all the more appealing--if your company is faltering to begin with, why not take a big gamble?
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A lot of discussion going on this thread about what may have happened after GT signed the loan with Apple, but not enough discussion on where GT was when Apple approached them. Let me explain my thoughts:
A few years ago, two thirds of GT was in the photovoltaic (PV) business. As many of you may know, the PV industry crashed in 2013. It is likely that GT probably would have gone bankrupt at the end of 2013 if it wasn't for Apple's approach. So, in a last ditch effort to keep the company afloat, the top executives made an agreement with Apple despite the fact that the terms of the deal was highly against their favor. It was HIGHLY risky, yes, but they were desperate and couldn't afford to ask for a sweater deal.
GT ran into hiccups, which is to be expected since they were scaling orders of magnitude up, something that they probably don't have too much experience in. That in itself is fine, because hiccups like these isn't uncommon (I know from personal experience). However, GT relied on Apple's on time loans to stay afloat. So when their project was delayed, they realized that bankruptcy was a question of time, rather than if. The rest is history.
A few years ago, two thirds of GT was in the photovoltaic (PV) business. As many of you may know, the PV industry crashed in 2013. It is likely that GT probably would have gone bankrupt at the end of 2013 if it wasn't for Apple's approach. So, in a last ditch effort to keep the company afloat, the top executives made an agreement with Apple despite the fact that the terms of the deal was highly against their favor. It was HIGHLY risky, yes, but they were desperate and couldn't afford to ask for a sweater deal.
GT ran into hiccups, which is to be expected since they were scaling orders of magnitude up, something that they probably don't have too much experience in. That in itself is fine, because hiccups like these isn't uncommon (I know from personal experience). However, GT relied on Apple's on time loans to stay afloat. So when their project was delayed, they realized that bankruptcy was a question of time, rather than if. The rest is history.
Definitely seems to support my point that the photovoltaic industry crashing last year seemed to push them to desperate terms with Apple.