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iPhone 6 reportedly won't have sapphire cover glass; GTAT slides, GLW higher

  • Chinese sites report Apple's (AAPL +1.4%) iWatch will feature sapphire cover glass, but its next-gen iPhone won't due to cost concerns.
  • Apple sapphire manufacturing partner GT Advanced (GTAT -5.1%) is selling off, while Gorilla Glass supplier Corning (GLW +1.4%) is following the tech sector higher.
  • 9to5 Mac reported last week GT has received delivery of 518 sapphire chamber/furnace systems - enough, according to one analyst, to provide cover glass for 103M-116M 5" iPhones per year - and is ordering another 420 systems.
  • It's worth noting Apple is generally believed to obtain a 50%+ gross margin on its latest-gen iPhones, and hasn't been scared in the past to use costlier components for the sake of improving the user experience.
Comments (37)
  • Mike Serebrennik
    , contributor
    Comments (473) | Send Message
     
    May I be the first one to say "OUCH!"
    11 Feb, 12:48 PM Reply Like
  • ricochet77
    , contributor
    Comments (20) | Send Message
     
    Chinese web sites, come on, nobody with any brains takes this rumor seriously. Stock was down before this broke and profit taking seems prudent based on run up in last couple of days.

     

    Look at orders and deliveries to Mesa factory and GTAT revenue guidance and I think that is actually facts that say sapphire screens are coming. Maybe it won't be on all models by Iphone6, but Apple has big plans for sapphire that involve more than this watch.

     

    Additionally, GTAT just announced their earnings will be in two weeks on a Monday. If you go back for years and look at GTAT earnings, when they make it for Thursday afternoon and CC on Friday morning the earnings and guidance are pretty much always bad. Additionally, when they make it for Monday and earnings are early in their quarterly cycle the earnings and guidance pretty much means they believe they will be presenting good news. I was waiting for this earnings announcement to decide to sell some and now with the Monday earnings I will be holding.
    11 Feb, 01:36 PM Reply Like
  • dr.tjm42
    , contributor
    Comments (3) | Send Message
     
    Why do they insist upon calling this Matt Margolis an "analyst"? He's just a guy who only has a bachelor's degree and no broker in CFP credentials whatsoever that just so happens to be admittedly extremely long in GTAT stock. Plus, he only owns 1 other stock in his entire portfolio. Talk about being hugely biased with a giant agenda. He's no more of an analyst than the rest of us and I cut people open for a living.
    11 Feb, 02:31 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    I like your take on that Monday biz. It vaguely sounds like astrology but I am very long so can use good news. As for the rest, I am with you totally.
    11 Feb, 02:40 PM Reply Like
  • DanoX
    , contributor
    Comments (2584) | Send Message
     
    He has more going on than those people at:

     

    http://www.zacks.com
    11 Feb, 04:52 PM Reply Like
  • Bill Swiggart
    , contributor
    Comments (142) | Send Message
     
    I agree that the nomenclature is kind of silly. However, it's worth noting that, were our favorite "analyst" actually to acquire the credentials to be able to manage other peoples' money, he certainly would be "educated" away from investing so much into a somewhat speculative stock like GTAT in the first place, and we'd never get the benefit of his analysis.
    12 Feb, 11:43 AM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    It was a rumor that started the up, and a rumor that broke it down. I would suggest that no one really knows yet.... The fact that Apple went whole hog on the furnaces does not tell me that they are just for watches. To be sure, the quality of both rumors is about equal....both suspect. But the ACTIONS tip in favor of full face iPhones.... perhaps 51/49
    11 Feb, 12:57 PM Reply Like
  • DocDonovan
    , contributor
    Comments (16) | Send Message
     
    Good breakdown. Better odds than if you're not counting cards at blackjack. ;

     

    Another question though. Does anyone have a valuation estimate based on production of iWatches only? I would think fairly significant.
    11 Feb, 01:03 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    GTAT said that they expected about $600-800M this year, if my recollection is correct. They restated that guidance a few weeks back....which if you do the numbers would have to represent a lot more than watches IMHO. Since companies usually state a conservative estimate then try to beat it, I think this points to iPhone faces or at least something more than watches. Of course we have 2 weeks to wait for the next earning cll and I expect major movement one way or the other coming out of it. If Apple has reversed course on the iPhone then we should see external signs of it. Mesa should slow down, and of course GTAT guidance, so recently restated, should be reversed, perhaps before the call.
    11 Feb, 01:11 PM Reply Like
  • spicyguy2005
    , contributor
    Comment (1) | Send Message
     
    We may have to count quite a quantity of sapphire to be used for finger print sensor on iPad and MacBook as well. Last year models had no finger print sensor because of supply constrain, and may be because of cost issue. I think it's reasonable to expect finger print sensor to be included this year.
    11 Feb, 02:17 PM Reply Like
  • Julian Acosta
    , contributor
    Comments (123) | Send Message
     
    Hmm, well those furnaces can't all be for a watch. Could be for another unannounced product. Would there be any reason to have so many furnaces this far in advance of the iPhone 7?
    11 Feb, 01:18 PM Reply Like
  • pocohonta
    , contributor
    Comments (540) | Send Message
     
    "We plan to use the furnaces to burn & destroy all those 'infringed Samsung phones' "
    <evil laugh from Tim Cook : >
    11 Feb, 01:26 PM Reply Like
  • Rhinoish
    , contributor
    Comments (83) | Send Message
     
    Said it before and I'll say it again, Apple wants sapphire for watches and other small use cases like the button, its not for the full screen yet. Cost is not the main issue here, its the tinting and lower amount of light sapphire lets through. Apple cares far more about how the screen looks than anything else and won't risk changing that until its perfect.
    11 Feb, 01:25 PM Reply Like
  • Julian Acosta
    , contributor
    Comments (123) | Send Message
     
    Then why so many furnaces right now?
    11 Feb, 01:39 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    Exactly....argue the points you want but the ACTIONS are what matter.... I think they speak far stronger than rumors. GTAT restated guidance a few weeks back, nothing seemed to have changed. I think Matt Margolis's detective work was phenomenal although his surety might have been over stated. I still think odds are in favor of more than a watch. Feb 24 is earnings....one way or the other GTAT will move a lot that day.
    11 Feb, 01:53 PM Reply Like
  • Dennis Baker
    , contributor
    Comments (1076) | Send Message
     
    We don't know why they are getting so many furnaces right now. It might just be a simple matter of production speed. Enough furnaces for 100 million phones over a year or enough to keep up with peak demand for a smaller product for a month or two. There are way too many unknowns here.

     

    It wouldn't be the first time an analysts has been completely out in left field either.
    11 Feb, 02:19 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    Reminds me of the old joke about how to make a baby in 30 days.... (9 women pg) No, I really doubt this explanation as it would be a bad biz decision on the part of both APPL and GTAT to have all this rush then idle all that equipment. Again the ONLY (as far as revs) known is that they project $600 - 800M from this factory....that is more than fingerprints.
    11 Feb, 02:45 PM Reply Like
  • berniespear
    , contributor
    Comments (232) | Send Message
     
    Hmmmm

     

    Interesting.
    11 Feb, 01:29 PM Reply Like
  • leopardtrader
    , contributor
    Comments (860) | Send Message
     
    AAPL wont go into iwatch thing. People are just pandering this rumour. AAPL is gonna deploy sapphire function on most of their up and coming devices ..and that include iphone. GTAT remains a double if not triple in months/years to come
    11 Feb, 01:33 PM Reply Like
  • rovo
    , contributor
    Comments (244) | Send Message
     
    It really depends on when the next iPhone release is scheduled for. If the June rumors for the larger iPhone6 are correct, then I would not expect this device to use the sapphire glass. Then, if we get another iPhone release in the fall of the standard sized iPhone, this device might use the sapphire glass. The Mesa plant is not producing glass as of now so any expectation of use this summer is nearly impossible.
    11 Feb, 01:36 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    How do you know Mesa is not in production yet? Seems I heard that they were targeting firing things up in February ASAP.
    11 Feb, 01:55 PM Reply Like
  • DocDonovan
    , contributor
    Comments (16) | Send Message
     
    Hopefully continues to come back up as investor realize that "iWatches ONLY" isn't such a bad thing, not to mention potential future prospects.

     

    Is it obvious I have a large stake in GTAT? Or maybe not so much..
    11 Feb, 01:37 PM Reply Like
  • Xvansan
    , contributor
    Comments (19) | Send Message
     
    I've made this comment several times on a variety of boards. AAPL does not want to use Saphire in its phones. Why do you think there are no waterproof phones? AAPL makes money every time someone drops their phone and cracks their screen. Every time someone replaces a phone with a scratched screen. Why would they eliminate that revenue stream? Saphire is strictly for an "iBand/iWatch" which will NEED to be relatively indestructable due to every day use. Especially if it is going to be used by the fitness community (ie, athletes, people in the gym around heavy weight) things like that. iBand is getting more and more likely every day
    11 Feb, 02:08 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    WRONG! I have an iPhone, now since the first. Last phone I bought I got AppleCare plus and for $65 they replace phones with broken screens.(or water damaged) It costs them money each time... Better to sell the insurance and not need to payout.
    11 Feb, 02:47 PM Reply Like
  • Randal James
    , contributor
    Comments (2326) | Send Message
     
    Xvan

     

    Sony makes waterproof devices.

     

    http://bit.ly/Nzvs6G
    11 Feb, 03:27 PM Reply Like
  • Redeemed
    , contributor
    Comments (5) | Send Message
     
    Mr. Market at work, a small news brief confirming there will not be sapphire on next-gen iPhones and many people just sell-out on GTAT. In my personal opinion, this is why Corning is making independent moves on the market with businesses like Samsung, Dow Chemical (Dow Corning), and even Snapcab and BMW. Corning Inc. has made some huge moves the past few months, and none of their disappointments and missed expectations were hidden during their earnings and investor relations news conferences. They are even more ambitious and confident in their tone then they have ever been and they are sitting on top of a solid balance sheet and a huge arsenal of cash on hand. The tone of the CFO Jim Flaws during both the earnings report and investor relations reflects an experienced, confident tone similar to Elon Musk CEO of Tesla during fall of 2012 --, just before the stock price blew up.
    11 Feb, 02:31 PM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    Corning will not live or die on Apple screens. They have a huge business outside of that and a great product. No one is saying you have to hate Corning to love GTAT. GTAT also has a huge solar business potential when solar companies restart buying solar furnaces. They have a much upgraded product for that market which will drive them to new heights in 2015.

     

    Rumors on iPhone screens are just that, rumors....up and down. The only thing e know is that huge investments have been made in GTAT sapphire by Apple. The rest is conjecture.
    11 Feb, 02:52 PM Reply Like
  • dcollinson
    , contributor
    Comments (5) | Send Message
     
    forget AAPL. Pay attention to INVN.
    11 Feb, 02:31 PM Reply Like
  • a alto
    , contributor
    Comments (124) | Send Message
     
    Guys , it don't matter , do,the math . 930 furnaces , 800 new employees , buy on this dip !
    11 Feb, 03:19 PM Reply Like
  • Pogoh
    , contributor
    Comments (34) | Send Message
     
    Could they be buying up this year but only planning for sapphire coating the 6S?
    11 Feb, 04:15 PM Reply Like
  • eersing
    , contributor
    Comments (7) | Send Message
     
    If this rumor has a real insider, it is likely not a big gun, and someone further down on the food chain. The rumor is far too vague and does not present any real confidence. Given the reports of enough furnaces being purchased for 200 million 5 inch displays, this would be enough sapphire for up to 500 million iwatch covers. That is absolutely ridiculous. If the rumor has any merit to it, it most likely will be a strategy where the more price sensitive iphone-5c line does not receive the sapphire screens, but the traditional iphones do. They likely will have enough sapphire to cover both the iwatch and the higher end iphones. Buy on the dip, GTAT is not going anywhere.
    11 Feb, 08:10 PM Reply Like
  • vinyal
    , contributor
    Comments (64) | Send Message
     
    Either way the iwatch is a guaranteed flop without Steve Jobs. I will sell my AAPL stock the day they announce a new product.
    11 Feb, 09:27 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (777) | Send Message
     
    Ha! That comment actually made me laugh out loud. Thanks!
    11 Feb, 09:44 PM Reply Like
  • JasonMiles
    , contributor
    Comments (91) | Send Message
     
    The answer is, right now nobody knows anything and is just guessing. The problem is that when these analysts "guess" people actually listen and react,even though they know no more than we do. Apple is a well run company and I'm sure they think all of this stuff out. The one thing that I believe is true is that they are undervalued for all they have going for them. Everything else is pure speculation
    12 Feb, 05:41 AM Reply Like
  • laguna_b
    , contributor
    Comments (282) | Send Message
     
    Backtracking here a bit....guidance at $800M assuming a $10 price is only 80M screens. Matt has estimated capacities in the 100- 200 M screens. Assuming conservative guidance this still would likely mean Apple hedges its bets and does a second line of iPhones at a higher price for sapphire...
    12 Feb, 09:18 PM Reply Like
  • NY2LA 1
    , contributor
    Comments (221) | Send Message
     
    Wow, such innovation, new glass. Wow, amazing game changer. Took three years to figure that out.
    12 Feb, 10:57 PM Reply Like
  • NY2LA 1
    , contributor
    Comments (221) | Send Message
     
    Steve Ballmer 2.0
    12 Feb, 10:58 PM Reply Like
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