“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