GT Advanced CEO faces scrutiny for selling stock ahead of Apple's sapphire-less iPhone 6 announcement
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The day before Apple announced the iPhone 6 and iPhone 6 Plus with glass screen covers, the CEO of GT Advanced Technologies sold $160,000 worth of his now-struggling company's stock, shares of which subsequently tanked due to the lack of a sapphire cover on the latest iPhones.
The cash-out by GT Advanced Technologies Chief Executive Tom Gutierrez occurred on Sept. 8, when shares of GTAT stock were priced at $17.38.
The very next day, Apple announced the new iPhone 6 and iPhone 6 Plus, which some observers were hopeful would feature sapphire screen covers made by GT Advanced. But the new iPhones instead feature ion-strengthened Gorilla Glass, and shares of GTAT immediately began to tumble.
The Sept. 8 transaction is now under even more scrutiny, after Gutierrez's company announced Monday it has filed for Chapter 11 bankruptcy court protection, sending shares of the company down over 90 percent to below $1. The CEO's $160,000 transaction was spotlighted Tuesday by The Wall Street Journal, which noted the sale date was seemingly uncharacteristic, with "no obvious pattern to his sales."
Gutierrez didn't sell any shares of GTAT in 2013, but has sold nearly 70,000 this year valued at more than $10 million. He made sales in the first three days of the month in May, June and July, but Journal reporter Daisuke Wakabayashi noted that the Sept. 8 sale date did not follow that same schedule.
For its part, GT Advanced says the CEO's sale was part of a pre-arranged plan established on March 14 of this year.
As of Tuesday afternoon trading, the price of GTAT has rebounded slightly, almost doubling its value from Monday. But it's still off considerably from the $11 range where it hovered after Apple's iPhone 6 announcement.
GT Advanced Technologies has said it plans to continue conducting business as usual as it attempts to "resolve its current issues." The company had $85 million in cash as of Sept. 29.
It was revealed in November 2013 that GTAT had won a $578 million multi-year contract with Apple to supply scratch-resistant sapphire material. Apple uses sapphire in its iPhone lineup to protect the rear-facing camera, as well as the Touch ID fingerprint sensing home button. It will also be featured in some — but not all — Apple Watch models when the wrist-worn device debuts next year.
Apple's mega-contract with GTAT led to hopeful speculation that the company might use sapphire to cover the entire screen of the iPhone 6. But although the material offers improved scratch resistance over competing Gorilla Glass, it's also more expensive and is prone to shattering when dropped.