GT Advanced Technologies Inc (NASDAQ:GTAT) took the whole market including its Arizona sapphire plant partner, Apple Inc (NASDAQ:AAPL), with surprise after filing for bankruptcy on October 6. The stocks of the company lost 90% value post the announcement wiping out its existing market cap within a day.
GT Advanced Technologies Inc (NASDAQ:GTAT) filed for chapter 11 bankruptcy on October 6, which came as a surprise to the market and none of the investors or analysts expected such an outcome, said Dennis Dick, Bright Trading LLC in Las Vegas. He further added,
“I can’t remember the last time … well Bear Stearns was probably the last time, but we were in a financial crisis then. This was completely out of the blue.”
What was quite surprising for the investors was the fact that the company made its scheduled bond payment last week before filing for bankruptcy. Apple Inc (NASDAQ:AAPL) called it a “surprising decision,” as the company was trying to keep things solvent with its sapphire glass partner.
According to market experts, the first sign of trouble initiated when Apple announced that it would not use Sapphire glass screen in iPhone 6 because of its poor performance in test results. In addition to it, Apple didn’t make the $139 million prepayment loan, as GTAT didn’t meet its technical milestones. Raymond James, Pavel Molchanov analyst, said, “It would appear that something very fundamentally broke down in the relationship between Apple and GT Advanced.”
GT Advanced Technologies Inc (NASDAQ:GTAT) gave a hint of trouble with Apple Inc (NASDAQ:AAPL) in its bankruptcy filing. Daniel W. Squiller, Chief Operating Office of GTAT, mentioned that the company was going through “severe liquidity crisis due to circumstances that will be more fully described.” The filing didn’t mention Apple but referred “series of transactions with a key customer.” responsible for the outcome. More details could be expected at the first hearing of GTAT at the U.S. Bankruptcy Court in Massachusetts.
This article has been written by Prakash Pandey and edited by Serkan Unal.