GT Advanced launches restructuring as Apple production ramps


GT Advanced (GTAT) will cut ~70 jobs and record $13.4M in charges ($1.8M cash) as part of an effort to realign its manufacturing, engineering, and supply chain resources. Current headcount is ~1,100.

GT plans to move most of its sapphire fabrication work to its new Mesa, AZ facility (producing sapphire for Apple, and rapidly expanding), and to "outsource more routine, non-proprietary engineering functions to third parties on an as needed basis." The company also plans to discontinue its Kyropoulous (KY) sapphire growth program due to a limited market.

More details will be given on the Q2 CC, which is set for the morning of Aug. 5.

GTAT -0.9% premarket.

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Comments (16)
  • moksha22
    , contributor
    Comments (54) | Send Message
     
    That's actually very good news for GTAT, restructuring saves money in the future and it seems that they are too busy making sapphire for Apple to do other things, beside of more research to make even better stuff (and more money!) in the future.

     

    The share price should go up!
    30 Jun 2014, 09:44 AM Reply Like
  • lseekman
    , contributor
    Comments (76) | Send Message
     
    Do these steps sound like things that happen before a company is acquired?
    30 Jun 2014, 10:15 AM Reply Like
  • laguna_b
    , contributor
    Comments (313) | Send Message
     
    What makes you think they would be acquired and that these are pre-acquisition moves????
    30 Jun 2014, 10:50 AM Reply Like
  • lseekman
    , contributor
    Comments (76) | Send Message
     
    laguana_b -
    Of course it could just be good management moves as well, but reducing people and costs that could be redundant; realigning its manufacturing, engineering, and supply chain resources, which could also be redundant; moving most of its sapphire fabrication work to its new rapidly expanding Mesa, AZ facility and discontinuing its Kyropoulous (KY) sapphire growth program due to a limited market could all be pre-acquisition moves?
    I'm long GTAT and like the moves either way.
    1 Jul 2014, 10:21 AM Reply Like
  • laguna_b
    , contributor
    Comments (313) | Send Message
     
    I would think you leave it to the new "owners" to renovate, not make possible deleterious decisions ahead of time. In any case we are both happily long GTAT.
    1 Jul 2014, 10:54 AM Reply Like
  • oil services guy2011
    , contributor
    Comments (128) | Send Message
     
    Probably not. Synergies realized are the buzz words for head count reductions that typically happen in the first year after an acquisition. Not prior to, with the exception of C-suite redundancies which if you see like a CFO jumping ship for personal reasons other than incompetence then you may be on to something.
    1 Jul 2014, 04:48 PM Reply Like
  • ctownzoo
    , contributor
    Comments (53) | Send Message
     
    I'm long GTAT, but what happens to the price if apple only announces them in an iwatch and not the phone? I still think sapphire will be used in both, but just curious what others think?
    30 Jun 2014, 01:04 PM Reply Like
  • sonicted
    , contributor
    Comments (863) | Send Message
     
    If Apple uses sapphire only for the iWatch, then there will be a massive down day (-20%) and stock will go back down to $ 10 before recovering. But upside would be very limited.
    30 Jun 2014, 03:06 PM Reply Like
  • Chris Posa
    , contributor
    Comments (7) | Send Message
     
    with 2 plants starting to make sapphire liquid metal... I am pretty sure we are in the money.
    1 Jul 2014, 01:47 AM Reply Like
  • bjnflicks
    , contributor
    Comments (4335) | Send Message
     
    I don't believe Apple would invest over a half billion in GTAT's expansion simply to make small watch type faces for a new product which they cannot be sure will be successful. 95% chance iPhone faces will also be made. Also back in May Apple filed this patent:

     

    The U.S. Patent and Trademark Office on Tuesday issued Apple a patent describing a process in which an iPhone's display glass — including sapphire — is integrally joined with a bezel made out of amorphous metal alloy, namely LiquidMetal.
    30 Jun 2014, 03:21 PM Reply Like
  • sonicted
    , contributor
    Comments (863) | Send Message
     
    Agreed. But I see a (very small) risk that an iPhone with sapphire display will only be launched in 2015. Then the stock will tank but recover later on.

     

    Same happened with AMS. They were sure Apple would adopt their NFC solution in 2013 - but Apple postponed it until 2014. Stock went to CHF 120 first, tanked to CHF 60, then went back up to CHF 150.
    1 Jul 2014, 07:57 AM Reply Like
  • Ed Porter
    , contributor
    Comments (715) | Send Message
     
    If they only use sapphire for a watch, what will they be using all the other sapphire they have (already) been producing for?
    30 Jun 2014, 08:24 PM Reply Like
  • laguna_b
    , contributor
    Comments (313) | Send Message
     
    iJewelry of course!
    30 Jun 2014, 10:27 PM Reply Like
  • Chris Posa
    , contributor
    Comments (7) | Send Message
     
    Long GTAT... I have been long on GTAT since 2010 and its all good so far. I believe the news that apple is going to utilize the sapphire for the screens on the iwatch and possibly the iphone 6 will ensure a huge upscale in price per share. I see the stock at approximately $29 per share by end of the year as long as the market remains stable. Anyone invested long term prepare for that leap into the green :) option calls @ 19.00 as of Jun 07 and 2300 shares in portfolio. I look forward to seeing you all when we make that long journey upward. Shorts need to get out of this stock before major increase.
    1 Jul 2014, 01:47 AM Reply Like
  • Ed Porter
    , contributor
    Comments (715) | Send Message
     
    "Long GTAT... I have been long on GTAT since 2010 and its all good so far".

     

    All good so far! - Were you really still saying that when the stock was at $2.65 Chris? ;-)
    1 Jul 2014, 04:56 PM Reply Like
  • Nooob Investor
    , contributor
    Comments (8) | Send Message
     
    Nice +5% increase today (9.33am)07/02/2014. Anyone knows why?
    2 Jul 2014, 12:33 PM Reply Like
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