GTAT Thoughts

I have been reading and thinking about GTAT.  At the end of the day, I believe the issue was that they just were not ready. GTAT is historically a manufacturer of equipment, not a manufacturer of many small products (like screens).  If you believe that, then all that is happened is a delay. Maybe a year, perhaps even just six months.

If you go back and read, they say in August "the build out of our Arizona facility.... Is nearly complete and we are commencing the transition to volume production. We remain confident in the long term potential of the sapphire materials business for GTAT".

So my read (in hindsight) is that short term he knew they were screwed as they were too slow in building out AZ to meet AAPL deadlines. But he still thinks longer term, AAPL will use material.

They go on to say they will get final AAPL payment in October for meeting operational targets. I think they would have gotten that sooner with faster AZ buildout.  The 2014 guidance was lowered to low end of range, which suggests they knew they were not going to be in iphone6 on day one, but also leaves door open for being in iPhone later in fiscal year.  Interestingly they bumped eps for 2014 as they said the mix has changed and they will have higher margins. That may mean more watches and fewer phone covers, but they get a higher margin on watches.

Everyone should do their own research and draw their own conclusions, I am just a guy with a spreadsheet.  I have sold some January 2015 calls (at a $15 strike price on GTAT) on about half my shares. I will hold the rest on my view that this is a short term setback as opposed to a "sapphire just doesn't work for phones" set back.  In fact I may take the procedes from the sold calls and buy calls on January 2016.

Good luck everyone, let me know your thoughts.