Apple suppliers shunned as GT Advanced bankruptcy sparks selloff

“Investor confidence in Apple Inc.’s suppliers and vendors is wavering in the stock market after the bankruptcy of GT Advanced Technologies Inc. (GTATQ) last month wiped out 92 percent of its value in a single day,” Matt Robinson, Tim Higgins and Oliver Renick report for Bloomberg.

“Shares of 21 companies that get at least 20 percent of their revenue from Apple have fallen 2.8 percent since the Oct. 6 bankruptcy filing by GT Advanced, which had a contract with the iPhone maker to supply synthetic sapphire that was never used in its devices,” Robinson, Higgins and Renick report. “The drop, affecting $135 billion of equity, compares with a 4.5 percent gain for the Standard & Poor’s MidCap 400 Index.”

“At the heart of the concerns are agreements between GT Advanced and Apple, including a $578 million loan, that the supplier said caused its bankruptcy. The company claimed in a court filing that the terms were so “oppressive” it faced fines of as much as $50 million for divulging any of its details. The bankruptcy is prompting investors to assess the risks from $24.5 billion of third-party commitments component makers had from Apple as of Sept. 27, according to an earnings report last week,” Robinson, Higgins and Renick report. “‘After GT, you go back and look at all your companies that do business with Apple and ask how exposed you are, what kind of risk are you subject to,’ Mike Balkin, manager of the $535 million William Blair SmallCap Growth Fund, said by telephone from Chicago. ‘Anytime we look at a company that has a large customer concentration it gives us pause because Apple is one announcement away from putting the company in trouble.'”

Much more in the full article here.

Related articles:
U.S. SEC opens investigation into Apple supplier GT Advanced – November 6, 2014
GT Advanced says Apple settlement will survive unsealing – November 5, 2014
Judge orders GT Advanced bankruptcy papers unsealed – October 30, 2014
Full list of GT Advanced articles here

16 Comments

  1. ‘Anytime we look at a company that has a large customer concentration it gives us pause because Apple is one announcement away from putting the company in trouble.’”

    You could also say that Apple is one announcement away from putting a supplier’s stock price through the stratosphere.

    That’s why its called playing the market…

  2. How many companies has Microsoft done this to, yet had ZERO blips on partner balance sheets.

    This is a supplier that over promoted what they could do and got burned by their own flame.

    How many other Apple suppliers went bankrupt? Very few I imagine because Apple is careful who they do business with.

  3. “Anytime we look at a company that has a large customer concentration it gives us pause because Apple is one announcement away from putting the company in trouble.”

    Yeah. And without Apple, they are probably one customer away from not having a reason to exist in the first place.

    1. …because Apple is one announcement away from putting the company in trouble.

      Living On The Edge! … of stupid. Scary cats, ignorami and cattle do not belong in the stock market. Neither do the manipulative parasites with cattle prods. *poke* *poke*

  4. Basically, you have an over-enthusiastic-profiteer that prematurely invests on speculation by Apple looking for another supplier. GT Advanced wasn’t very…advanced when it came to tech secrecy.
    Loose lips sink ships, they said. Well, immediately after a meeting with Apple, GT spammed the tech sites that it was in process of supplying Apple with sapphire for future iphones, ipads, etc.
    Apple likely saw an unreliable (NDA breaker) and threw them under the “market” bus.
    If I were a supplier to Apple, you wouldn’t even know it. And if I had to disclose anything, it would be: “yes, I have a contractual obligation not to discuss anything further. Next question!”
    Apple makes lawyers too.

    1. If you can supply product of the capabilities and quality you claim being an Apple supplier will make your company, fail to live up to your claims either in quality or timescale or both and you may well break the company. As it should be.

  5. “At the heart of the concerns are agreements between GT Advanced and Apple, including a $578 million loan, that the supplier said caused its bankruptcy. The company claimed in a court filing that the terms were so “oppressive” it faced fines of as much as $50 million for divulging any of its details.

    I wonder in which world those people live in. Have you ever tried to get a loan? When you know how many guarantees and small prints a regular loan has imagine when the loan is for more than half billion. Some people really needs serious reality check.

    1. So either:

      1. We really have no clue what we are doing and shouldn’t be allowed to run any business.
      or
      2. We knowingly over-promised and gambled that we could figure it out in time.

      But…. uhhhh…. it’s Apple’s fault.

      1. Exactly.

        Or let’s just sell them a bunch of bullspit and take Apple’s money (because they can afford it). Pay ourselves a large salary, lie to investors and then sell all the stock and make a fortune, then file bankruptcy.

        Ah, I’m thinking they knew EXACTLY what they were doing. Freak’n con artist. Screw the SEC, someone needs to call a guy who know’s a guy……

  6. Ah the spin, yes the GT Advanced bankruptcy is going to affect the other suppliers, Apple is Doomed and so on (thanks to Derek for the other analogies).

    At the end of the day though I doubt Apple stock will be driven under $100 again over this.

  7. This makes perfect sense. Apple always refuses to comment, so the reporter went with the story as told by GTAT.

    Need clues?

    1) “…which had a contract with the iPhone maker to supply synthetic sapphire that was never used in its devices.” If the contract was a contract Apple would have paid them upon delivery.

    2) “…including a $578 million loan, that the supplier said caused its bankruptcy.” I actually can’t think of any further wording that would make that seem less bizarre.

    3) “…the terms were so “oppressive” it faced fines of as much as $50 million for divulging any of its details.” Well that’s pretty simple, then: don’t divulge details!

    It all comes down to this: Make a product your customer will be delighted to use and your future is secure.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.