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CUSTOMER RELATIONSHIP MANAGEMENT NEWS. UPDATED 9 MINUTES AGO.
You are here: Home / Mobile Tech / Bankrupt: Apple's Sapphire Partner
Apple's Sapphire Display Partner Files for Bankruptcy
Apple's Sapphire Display Partner Files for Bankruptcy
By Dan Heilman / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
OCTOBER
06
2014
Even a lucrative contract with Apple looks unlikely to save a New Hampshire-based maker of lab-grown sapphire used in mobile-device screens. GT Advanced Technologies said Monday that it filed for Chapter 11 bankruptcy court protection not even a year after it had signed a $578 million deal to supply Apple with sapphire goods.

GT makes polysilicon and ingots, which are then processed into photovoltaic modules.

The company had seen its stock price rise after it signed a deal with Apple in November 2013 to make sapphire products. Observers and investors had expected those products to be displays for the next iPhone smartphone, but as it turned out, Apple stayed with a glass display when it debuted the new iPhone 6 in September.

GT's stock has fallen since then, even though the Apple Watch smart watch, expected next year, will include a sapphire display in some of its models. The stock dwindled from about $17 just before Apple unveiled its new iPhone 6 in early September to about $11 on Friday. Shares fell to less than a dollar each during Monday trading.

Still in Business

Nobody outside Apple was certain, but there had been speculation that the iPhone 6 display would be sapphire. That would have posed a threat to Corning, which has made its Gorilla Glass for the iPhone since it was first made. Sapphire is considered by some to be a superior material for the displays, since it is more scratch-resistant. Corning has countered that sapphire is heavier, more brittle and more expensive than its Gorilla Glass.

"Today's filing does not mean we are going out of business," said Tom Gutierrez, GT's chief executive officer. "Rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing...and improve our balance sheet."

In the deal made last year, Apple agreed to prepay GT $578 million in installments, and GT would use the money to develop a 1.3-million-square-foot facility in Mesa, Arizona, to create sapphire products using about 700 employees. GT is required to repay that money over five years, starting in 2015.

Big Part of Revenue

The sapphire segment of GT Advanced's business made up more than three-quarters of the $58 million in revenue it had in its second fiscal quarter, with most of it related to the sale of sapphire production equipment. The company showed a net loss of $86.4 million in the second quarter.

The company said in a press release that it expects a U.S. bankruptcy court in New Hampshire to let it "conduct business as usual" while it reorganizes. As of the end of September, it had approximately $85 million in cash. GT is now seeking debtor-in-possession financing, which would provide the company with additional funds.

"We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success," Gutierrez said.

Tell Us What You Think
Comment:

Name:

MalcolmTucker:
Posted: 2014-10-06 @ 12:21pm PT
This is great news for Microsoft and Android manufacturers.

In fact, Samsung's U.S. phone HQ (located in Texas) is likely a shorter distance to ink a deal than Apple is. This restructuring really means that the technology originally destined to work on Apple products will be available to every phone manufacturer. Also, a proper collaboration with Samsung or Microsoft would most likely result in a better quality product than anything Apple could do.

Apple seems to be having too much trouble with making sure its existing devices are without software flaws.

Sledeg Hammer:
Posted: 2014-10-06 @ 12:00pm PT
If you're gonna quote a stock price, you should include the stock's symbol.

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