The history of sapphire screens on Apple (NASDAQ: AAPL) products is a short and eventful one, despite not a single product shipping with a screen protected by the strong material. What was once one of the most hotly anticipated features of the iPhone 6 never materialized, and pushed the sapphire supplier over the edge into bankruptcy. But, questions remain as to whether the deal between the two companies was a fundamentally fair or flawed one  —  that was set up without the proper due diligence.

When the iPhone 6 launched without a sapphire screen, Apple was silent to the reason why this occurred. After all, well placed leakers had fairly convincing pictures and videos of screen protectors for the iPhone 6 which, by their sheer strength, had to be made of something other than regular plastic or Gorilla Glass. The absence of the sapphire-based screens led many to question as to if the upcoming Apple Watch was in danger, as sapphire would be even more critical to the smartwatch than to the iPhone 6. But while Apple was silent on the issue of sapphire, only confirming its non-use when the iPhone 6 launched, the bankruptcy filing of  GT Advanced Technologies (OTC Pink:GTATQ) was the first step in finding out what exactly happened to Apple’s sapphire ambitions.

For most of 2014, GTAT was a stock market darling. In November of 2013 Apple announced that it GT Advanced Technologies would be its sapphire supplier, sending the company’s stock into the stratosphere. Apple’s orders accounted for approximately 80% of GTAT’s projected 2014 revenue (estimates peg this to be around $700 million), and Apple loaned it $439 million to upgrade and expand its facilities to meet the expected demand from the iPhone 6 and Apple smartwatch.

Then on October 7, bankruptcy.

Who’s to blame?

While GT Advanced Technologies has filed for bankruptcy, its filings with the courts don’t entirely paint a clear picture why the firm said it was going under. GT Advanced Technologies lawyers have petitioned the court to keep the contracts and other confidential documents between it and Apple sealed.

The best indicators come from reports by securities research firms. In a note to clients, Gilford Securities said that Apple may have forced GT Advanced Technologies to begin loan repayments early as it may have believed GT Advanced Technologies was not hitting performance targets. As mentioned by MarketWatch, Pacific Crest Securities published a note that said the firm’s researchers believe Apple was unimpressed with the quality of sapphire produced by GTAT and decided to source it elsewhere — but requiring Apple to still pay back the loans.

While the company’s lawyers fought to keep the most revealing documents about its relationship with Apple — including the contracts — they also asked the court to render the contracts the two companies have null and void saying that they imposed  “oppressive and burdensome terms and obligations on GT.”

“GT believes that it has many claims against Apple arising out of its business relationship with Apple.”

Then things got better

On October 23 GT Advanced Technologies published a press release announcing that it had reached a settlement agreement with Apple. The agreement holds that GT will wind down its sapphire production business in addition to liquidating its furnaces in order to pay back Apple.

“We are pleased with the settlement that we have negotiated with Apple,” Tom Gutierrez, president and chief executive officer of GTAT said in a statement.

“Apple put a lot of effort into an ambitious new sapphire manufacturing process with GT which is not ready for production,” Apple said in a statement. “We’re going to continue evaluating GT’s progress on larger sapphire boule development, as well as consider other options for the facility.”

But the agreement was still unfair

In all likelihood GT Advanced Technologies asked the court to keep its contract with Apple sealed, along with other key documents, because the agreement would be viewed by the public and stakeholders as fundamentally unfair for GTAT. The opportunity for massive windfalls of profit, but punishing clauses in the event that GTAT could not meet Apple’s expectations.

It could be that if GT Advanced Technologies’s biggest voting shareholders got word of this agreement there would be a coup of sorts, as shareholders would recognize the dangers of this contract. It appears (though the contracts are still sealed) that Apple was given too many outs in the event that this new sapphire process simply did not work.

Apple might not have deliberately bankrupted GT Advanced Technologies, but GT Advanced Technologies’s decision to sign on to this contract with Apple without negotiating a better deal set in place the path for  its  downfall.

The post Anatomy of a Deal: What Went Wrong Between Apple and GT Advanced Technologies appeared first on VR World.

As many of you may already know, GT Advanced Technologies (NASDAQ:GTAT) filed for bankruptcy yesterday after being unable to service their debt commitments. Because they defaulted on their debt, they had to file for Chapter 11 bankruptcy protection, which as a result caused their stock to plummet 90% in a single day.

According to the Wall Street Journal, GT Advanced’s CEO Thomas Gutierrez had sold shares on Sept. 8 at an average price of $17.38. The next day, after Apple’s announcement, GT shares fell 13% to $14.94 and they would eventually fall as low as $0.83 yesterday after rebounding today up to $1.21 per share. However, Gutierrez claims that his share sale was part of a pre-arranged plan put in place on March 14, 2014.

However, if you look at his share sales in 2015, they amount to around 700,000 shares and total a whopping $10 million. This is in addition to the fact that he had not sold any shares at all in 2013, even though he had become CEO back in 2009. Things seriously don’t look good for Gutierrez, and other executives within the company should also be checked for any sort of insider trading when you consider that some of them very likely knew what was really going on.

As a whole, in 2013, Gutierrez made a total of $5 million, most of which was issued in the form of company stock. When you take into account that he took in $10 million from sales of his stock this year alone, you can start to see why his sales of shares in 2014 seem a bit shady. Sure, he was trying to capitalize on a higher share price, but CEOs are rarely allowed to trade based on the future unless they plan to manipulate the future in order to benefit from the inflated share price.

All of this is conjecture, unfortunately, but the numbers do tend to have a way of speaking for themselves. There’s a very good chance that GT Advanced will have some sort of investigation to explain what happened and where $1.85 billion in shareholder equity evaporated and why company executives had not done their job to inform investors.

The post GT Advanced CEO Sold Millions Before Bankruptcy appeared first on VR World.

GT Advanced Technologies (NASDAQ:GTAT) once had a market cap of over $2 billion. The company specializes in material sciences and manufacturing and is well known as an expert in sapphire applications in manufacturing and technology. Originally, rumors of a sapphire iPhone 6 display had pointed to GT Advanced Technologies as being the primary company responsible for supplying such displays and as a result, their stock rose from the sub-$10 range to $20, effectively doubling the company’s value in a few short months.

The rumors of GT Advanced Technologies involvement started with a CNET article talking about how Mark Shuttleworth had claimed that Apple had snapped up the majority of the Sapphire display supply. Since the publication of that article, GT Advanced Technologies’ stock never dropped below that price again, until the iPhone 6 announcement. This was mostly thanks to analysts and press who would continually pump up the rumor with new rumored information about the sapphire displays. The rumors would waiver between being saphhire-coated and being a full sapphire display as well as having a sapphire layer. Either way, once again, the press were responsible for pumping up a stock based on rumors and speculation rather than fact and reality, and partially, Apple is also to blame for this with all of their secrecy and minimal communication.

Now, after the iPhone 6 announcement it became quite clear that Apple was not using sapphire crystal in their displays which meant that GT Advanced Technologies’ biggest rumored buyer wasn’t going to be building millions and millions of sapphire crystal displays using its products. This immediately spurred a series of articles on September 19th saying that either GT Advanced Technologies could not supply enough displays for Apple in order to be able to launch with it, or that Apple had never planned to use sapphire displays to begin with.

If you look at GT Advanced Technologies’ shares on that day, they had a very steep drop. In fact, GTAT appears to be one of the pure cases of a pump and dump. The stock would get pumped up near $20, and then dumped by whoever really knew the truth or by people that weren’t convinced that the rumors would come true. This happened by the looks of it, three times. The final time, however, appears to have been GT Advanced Technologies’ nail in the coffin as the company today filed for bankruptcy protection and caused the shares in the company’s stock to drop 90% where it currently sits at $1.07. GT Advanced Technologies had a $2 billion market cap when it was worth around $20 and now it has a market cap of around $150 million, which means that $1.85 billion in wealth has been erased today. We are very sorry to hear that this has happened to investors of GTAT, but the reality is that the company’s value (above $10) was based almost entirely on rumors and not much else.

We will continue to follow the story as it develops once we hear more from GT Advanced Technologies executives and the company’s own official statements about the chapter 11 bankruptcy.

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