Slashdot Mirror
Apple Sapphire Glass Supplier GT Advanced Files For Bankruptcy
mrspoonsi writes GT Advanced Technologies is filing for bankruptcy. In an announcement on Monday, GT Advanced, which makes sapphire displays that many investors hoped would be in Apple's newest iPhone, said that it was filing for Chapter 11 bankruptcy. In early September, shares of GT Advanced got crushed after the company's sapphire displays were not in the latest version of Apple's iPhone 6 and 6 Plus. GT Advanced, however, signed a multi-year agreement with Apple last November to supply the company with sapphire material. That agreement included a $578 million prepayment, which GT Advanced is set to repay Apple over a five-year period starting in 2015.
It might be important to consider that a company filling for chapter 11 bankruptcy protection is not terribly uncommon. The company has no plans to shut down, nor liquidate assets. Ch. 11 is all about restructuring debt so that they can pay off the creditors and return to normal operating procedures. Most people in this thread are treating this like a Ch. 7 which it is not. In fact the difference between the two are so stark that many smart investors will buy into companies that have good prospects and a plan in Ch. 11. It can make a company much much stronger on the back end.
You forgot:
6) Apple obtains GTAT through bankruptcy proceedings in lieu of being repaid for cheaper than what it would have cost before #2
7) Apple vertically integrates a component of supply chain using change it found in their lobby's couch cushions.
Care to expand on this?
Plenty of private investors had looked at Solyndra and declined to invest. It was already apparent that Solyndra had bet on the wrong technology, and their manufacturing costs were uncompetitive. They were using questionable accounting to cover up their problems. When news got out that the government was thinking of giving them a half billion taxpayer dollars, lots of people started raising red flags. Many people, both inside and outside the company, already knew that Solyndra was a sinking ship.
Two lessons that should have been learned from the Solyndra debacle, but were not:
1. The government should stick to funding basic scientific research, and refrain from "picking winners" by investing in private businesses. It is far better to leave that to people investing THEIR OWN MONEY.
2. If the government ignores lesson #1, and wants to invest anyway, on the theory that politicians are smarter than markets, then they should pair tax dollars with private investments, and only invest a limited percentage, in businesses that have been vetted by private investors.