Apple Surprised by GT's Bankruptcy Filing, Considering Next Steps

In the company's first public statement regarding the bankruptcy filing by its sapphire partner GT Advanced Technologies earlier this week, an Apple spokesman tells Reuters the company was surprised by the filing and that it is now figuring out its next steps.

"We are focussed on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps," spokesman Chris Gaither said.

GT-logo2011-pms
GT reportedly fell into difficulty when Apple withheld a final $139 million prepayment loan, part of a roughly $580 million package intended to help GT start up operations at the Mesa, Arizona sapphire production plant owned by Apple.

With Apple opting not to use sapphire for the display on the iPhone 6 and under no commitment to purchase sapphire from GT, the sapphire producer quickly started running out of cash. And with repayment on the Apple loan set to start in January, if not sooner, GT found itself needing to enter bankruptcy protection while reorganizing its business.

While the Apple Watch will use sapphire on some models, KGI Securities analyst Ming-Chi Kuo claims GT's bankruptcy should have no impact on that product as Apple can source sapphire for that product from multiple sources.

Top Rated Comments

wxman2003 Avatar
101 months ago
Apparently the sapphire glass did not meet Apple's new requirement of being bendable.
Score: 14 Votes (Like | Disagree)
newyorksole Avatar
101 months ago
Is it me or is Apple giving more and more statements than usual this year ?
Score: 6 Votes (Like | Disagree)
mKTank Avatar
101 months ago
*Focused

No. The world doesn't revolve around the U.S.
Score: 5 Votes (Like | Disagree)
bbeagle Avatar
101 months ago
Apple loaned GT $441 million so far. GT is mismanaged and planned to not pay Apple back, which is why they filed bankruptcy.

Apple would be out another $139 million if they gave GT the remainder of the loan. GT would have just declared bankruptcy in January when the first payment came due.

It would be ridiculous for Apple to not pay $139 million to secure their $441 million investment, so Apple must have seen things going wrong at GT.
Score: 5 Votes (Like | Disagree)
gnasher729 Avatar
101 months ago
I am likely missing some key aspects of the situation, but wasn't the bankruptcy due to an overreaction by the market regarding Apple not using Sapphire glass as their main display material for their new phones?

"The market" has nothing to do with a bankruptcy. You go bankrupt if you can't pay your bills. Your share price goes up or down if "the market" thinks you are doing well or badly. But what the market thinks doesn't affect your cash in the bank.
Score: 4 Votes (Like | Disagree)
840quadra Avatar
101 months ago
The stock price has almost nothing to do with the operations of a company with the exception of when you try to raise capital from the market. In that case, it only means that if the price of the stock goes down, you have to offer more shares of stock to get the same amount of cash, diluting the value of the current stock holders holdings.

Imagine if Apple stock today became only worth $1. Would Apple have to declare bankruptcy? No, because they have plenty of cash on hand and run a profitable business. It would make the executives sad because their compensation is based on stock, but it would not prevent them from operating the way they always have.

Most likely what happened is that GT expected to sell millions of screens and when Apple didn't purchase them they realized that they wouldn't have cash flow to operate. Bankruptcy allows you to not pay your creditors while you reorganize your company to again operate in a profitable way.

Again, when was this more than a rumor? Not trying to be confrontational, I just don't recall seeing any confirmed report of Apple's plans on Sapphire screens.
Score: 4 Votes (Like | Disagree)

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