The markets are extremely dynamic; that’s why every move by any company is closely monitored by investors and market analysts. The onus is on the company to ensure that it does it right every time as one unfavorable move would take the company to its knees. And that’s what happened to Apple Inc. (NASDAQ:AAPL) partner GT Advanced Technologies Inc (NASDAQ:GTAT). The company was boasting of over a billion in worth just the other day, but after announcing that it called Chapter 11 to apply for bankruptcy protection, the company’s stock has plunged more than 90.4% to trade at $1.06. That means $10 down.
The company started feeling the heat last month after it became apparent that Apple Inc. (NASDAQ:AAPL) wouldn’t use its sapphire material for making iPhone 6 and iPhone 6 Plus screens. The screens of the new iPhones were made using glass. It’s said that the Cupertino, California-based company had carried out a series of tests that revealed that iPhone screens made using sapphire proved more brittle than with Gorilla glass.
This wasn’t good news for GT Advanced Technologies Inc (NASDAQ:GTAT) that had hoped to rake in huge sums from the project.
Apple Inc. (NASDAQ:AAPL) had earlier announced that it would build a $700 million facility in Arizona for the manufacture of synthetic-sapphire, which was to be run by GT Advanced Technologies Inc (NASDAQ:GTAT). This gave the company a lifeline as the iPhone manufacturer committed $578 million in loan for the sapphire maker towards the project. The loan was to be paid within 5 years beginning 2015.
Some analysts see the sapphire facility deal as the source of trouble for the company. This is because the tech giant switched in the last minute to use Gorilla glass instead of the sapphire protection.
“The company appears to have bitten off more than it can chew in regards to the relationship with Apple, which we believe is the culprit here,” Cowen and Co. analyst Jeffrey Osborne wrote in a note.
According to Osborne, it must be that GT Advanced Technologies Inc (NASDAQ:GTAT) failed to meet some operational obligations of the agreement, compelling Apple Inc. to pull the plug.
Information released earlier from the iPhone maker however indicated that the screen of the iWatch, to be released early next year, would be made using sapphire. There are however no clear records within the public domain showing that the company had committed to use sapphire for the iPhone 6 and iPhone 6 Plus.
This article has been written by Victor Ochieng.