Former Apple sapphire supplier GT Advanced emerges from bankruptcy

GT Advanced Technologies — at one time tapped to supply sapphire for Apple products — on Friday announced that it had finally emerged from bankruptcy, thanks to an $80 million investment from an unnamed collection of financiers.

"Through this process, we have resolved the issues which led to our decision to seek bankruptcy court protection," said CEO David Keck in a press release. The executive also promised that GT would concentrate on "industry leading capabilities in the solar and sapphire markets."

GT declared bankruptcy in late 2014, contending that "bait-and-switch" tactics by Apple eventually led to it seeking Chapter 11 protection. It was ultimately forced to abandon a plant in Mesa, Arizona jointly set up between the two companies, cut hundreds of jobs, and sell off over 2,000 furnaces.

The company is now slowly paying back a $439 million prepayment from Apple.

Before its financial collapse GT was rumored to be working on sapphire for iPhone displays. In practice, iPhones have continued to use glass display panels, relegating sapphire to components like lens covers and Touch ID sensors. Mid-tier Apple Watches do, however, use sapphire to make their displays scratch-resistant.

10 Comments

levi 344 comments · 10 Years

About 8 years ago

I hope under new management.

slurpy 5388 comments · 15 Years

Constable Odo (or the other 65 pseudonyms he has) is gonna be pissed.

duervo 73 comments · 12 Years

levi said:

I hope under new management.

Not that I would know any of this on any other day (I was curious so I just checked) ... David Keck Is the new CEO. Tom Gutierrez was fired ... Err, I mean "retired" ... Last year. His LinkedIn profile makes no mention at all of his experience with GT Advanced, which is not surprising.

The "bait and switch" bit referred to in the article isn't surprising either. Cognitive Dissonance theory does a good job of explaining why the company made those statements. "Mistakes were made, but not by us!"

nolamacguy 4750 comments · 10 Years

Somebody let Sog know -- I'm sure he'd like to invest again.

radarthekat 3901 comments · 12 Years

It's AAPL and GTAT I use when explaining to novices the difference between investment and speculation.

An investment is a commitment to holding a security as long as the underlying fundamentals and business prospects remain intact.

Take Apple, for example. Apple shares are an investment as long as Apple continues to perform as well as it is currently performing. As long as it continues to generate the revenues and earnings it is currently generating. Even if neither rise.

Speculation is a bet on some future outcome, either positive or negative, that would materially change the fortunes of a business.

Note that the main difference here is that an investment relies upon the continuation of the status quo while speculation is a bet against the status quo.

GT Advanced Technologies (GTAT), a maker of solar manufacturing equipment, is an example of a speculative bet, and one that went terribly wrong for those who made that bet. In 2012 and 2013, GTAT saw its solar business collapse under the weight of competition from Chinese manufacturers. Late in 2013, GTAT partnered with Apple to manufacture sapphire displays, presumably for use on the iPhone 6. GTAT needed that partnership to go well; it represented GTAT’s lifeline to a corporate reboot, a chance to reinvent itself in a new line of business in which it had little experience. That reinvention, if successful, would materially enhance the value of the company. If a failure, it would mark the collapse of GTAT as a viable business. GTAT did fail, and filed for bankruptcy protection. In the process, the share price went from a high of about $20 to about 40 cents. Many of those holding the shares indignantly complained in online forums that their investment was wiped out by unscrupulous actions of GTAT's CEO and management team. They weren’t wrong about the actions of GTAT’s management, but they were wrong in characterizing their GTAT holdings as an investment. These people were speculating and paid a high price.