- GT's (GTAT) big Q3 miss and even bigger 2013 guidance cut is due to the company dedicating the vast majority of its advanced sapphire furnace capacity to handle materials production for Apple rather than servicing other clients. Nonetheless, the company says it remains committed to addressing traditional markets.
- Thanks to Apple, GT is now guiding for 2014 revenue of $600M-$800M, well above a $582.5M consensus. GT says its Apple materials sales are expected to carry a "substantially lower" gross margin than equipment sales (Apple is known for driving a hard bargain with suppliers). But the deal is still expected to be accretive to earnings starting in 2014. ~80% of GT's 2014 sales are expected to come from its sapphire business (involves sales to both Apple and others).
- GT also notes the deal requires the company to maintain "a minimum level of capacity," and that the company "will be subject to certain exclusivity terms during the duration of the agreement" (i.e. some other sapphire firm will probably have to service Samsung).
- GT has used $96M in cash to pay down a credit facility and terminate a credit agreement, moves deemed necessary for the Apple deal to proceed.
- With GT focusing on Apple, Q3 orders only amounted to $7M, -50% Q/Q. Solar orders totaled $3M, and sapphire orders $4M. Backlog fell by $44M Q/Q to $658M.
- Arizona's governor's office has issued a PR praising the deal, which will involve the construction of a plant in Mesa, AZ.
- GT's Q3 results, the Apple deal
GT Advanced resumes trading, shares +19.3% AH; more on the Apple deal
Nov 4 2013, 17:11 ET