About the Apple GTAT deal
Everyone is so excited about the deal that brings about 500 million in cash to GTAT but what is Apple really buying? Is Apple buying GTAT ovens to grow and manufacture GTAT sapphire products? No. Will the large inventory of GTAT ovens still belong to GTAT? Yes. Will GTAT have the responsibility of producing items for Apple up to their stringent specifications and have the risk that a percentage of what is produced will be rejected similar to what happend to Jabil last year? Yes. Does this mean that this is a prepayment representing a liability for GTAT on its books? Yes. Does this deal represent the same gross margin as would have resulted from an outright sale? No. So, will the nice fat margin numbers GTAT has shown in the past be negatively effected? Probably. Does this also mean that this venture could actually lose money for GTAT? Umm, yes. Is it also conceivable that if this venture fails, it will result in a massive write down of this sapphire oven inventory resulting in crippling losses? Ummmm, aaaaah, yes, possibly. Does this news completely overshadow the fact that GTAT came up short on other key aspects of its business? Okay, you guys have ben warned.