“In the course of the GTAT bankruptcy, Apple may come into possession of the Mesa sapphire furnaces, but whether this is a good thing remains to be seen,” Mark Hibben writes for Seeking Alpha. “These furnaces may not be capable of producing sapphire of sufficient quality to meet Apple’s needs, leaving Apple without the production capability to support its forthcoming Watch.”
“GTAT was on a clear trajectory to run out of cash by the end of Q3, but I agree that it does leave open the question of whether the remaining $139 M prepayment could have saved GTAT. One thing is certain, however. Once GTAT filed Chapter 11, it was never going to get the money from Apple,” Hibben writes. “This really speaks to the breakage in GTAT’s game plan for the Mesa plant. Either they realized that the $139 M wasn’t going to be enough to stay solvent (likely in my opinion), or they realized that they wouldn’t qualify for the $139 M and Apple would withhold payment. Given Apple’s expression of surprise over the bankruptcy, I don’t think Apple expected to withhold payment, so I regard this as somewhat less likely.”
“Either possibility indicates that the Mesa plant wasn’t going to be able to enter full production and meet its delivery commitments as GTAT had expected as of the end of Q2,” Hibben writes. “Why GTAT couldn’t deliver sapphire is really the fundamental question, and the answer to that question will govern Apple’s path forward.”
Much more in the full article here.
Related articles:
GT Advanced blames ‘oppressive and burdensome’ Apple terms in quest to ax sapphire production – October 10, 2014
GT Advanced to request to shut down synthetic sapphire production – October 10, 2014
Shattered sapphire dreams at GT Advanced – October 8, 2014
Apple’s withholding of $139 million payment led to GT Advanced bankruptcy filing – October 7, 2014
GT Advanced CEO sold 9,000 shares the day before Apple’s iPhone 6/Plus event – October 7, 2014
Law firms launch investigations into possible violations of federal securities laws by GT Advanced – October 7, 2014
Analyst: Apple may take possession of sapphire furnaces from GT Advanced – October 7, 2014
Apple to provide debtor in possession financing to GT Advanced? – October 7, 2014
Investors stunned over GT Advanced bankruptcy filing – October 7, 2014
GT Advanced files for chapter 11 bankruptcy court protection – October 6, 2014
Apple and GT Advanced rampup sapphire production in Mesa – August 11, 2014
GT Advanced expects sales of sapphire production tools to boost profit; shares surge – August 5, 2014
Apple and GT Advanced open second sapphire plant in Salem, Massachusetts – June 19, 2014
Apple patents method for embedding sapphire displays in LiquidMetal device chassis – May 27, 2014