Details are still emerging from the
surprise bankruptcy filing of Apple sapphire supplier and partner GT Advanced, with new stories of
possible stock shenanigans by CEO Thomas Gutierrez and speculation that the bankruptcy was brought on, at least in part, by
a withheld payment from Apple. On Monday, the first day of trading following the announcement, the company's stock dropped 93 percent from $11 to around 80 cents; it rose Tuesday to close at $1.21 per share.
The firm could be investigated by the SEC for the fact that CEO Thomas Gutierrez sold the last 9,000 share of stock he held in the company just one day before the iPhone 6 was unveiled, now using a "generic" version of Gorilla Glass rather than GT Advanced's sapphire glass as
some rumors had expected. Though Apple was never actually likely to use sapphire glass for the entire front of the latest iPhones, manufactured sapphire glass from GT is used to protect the Touch ID sensor and the camera on all the new iPhones (and will be added to the forthcoming iPads, in all likelihood), with some still insisting Apple did, at one point, have larger plans for the material.
While the news of the stock dump has sparked talk of insider trading charges, Gutierrez actually filed plans to sell the last of the stock
back in March as part of an ongoing move to cash in on his holdings. Since February, he has methodically sold all of his over 700,000 shares in the company. Without evidence that he knew of imminent disaster back at the beginning of the year, it would be difficult to claim he had "dumped" the stock. The timing of the final sale had been planned far in advance of any possible revelations, though in total Gutierrez has netted over $10 million from his divesture.
The
Wall Street Journal is reporting that Apple has
withheld a final payment of $139 million from the company, and that this may have triggered the bankruptcy action. The iPhone maker was due to give GT Advanced the money by October 31 as part of a total $578 million contract in which Apple would provide funding for production facilities that Apple would build and own, but lease to GT Advance.
It is not known why Apple may have withheld the money, though speculation has circulated that GT Advanced was unable to meet at least one Apple deadline or quality level with its products. The withholding of the payment, however, dropped GT's capital assets to only $85 million as of the end of September, well below a critical threshold of $125 million the company needed to fulfill obligations, the
Journal reports. The drop in cash triggered a contractually clause allowing Apple to try and recoup the $440 million it has poured into the partnership thus far.
Whatever the cause of the failure of GT Advanced Technology, the bankruptcy protection will allow the company a chance to reverse its fortunes. Apple will be largely unaffected, as it can source the quantity of sapphire glass it present uses from other sources, and technically owns the assets it has invested in during the GT partnership. More details -- including a possible answer to the rumor that Apple had wanted to change over to all-sapphire displays -- will likely come in the following weeks as the bankruptcy filings get scrutinized.
For now, all that is clear is that GT Advanced bet the company on its sapphire technology, and working with a single client. It may well be able to recover from the current setback, but the timing of the CEO's final sell-off, however coincidental, will not instill much faith in investors in the short-term.
Top