Archive for May, 2014

Update: Video proven likely to be a clever prank. The good news is less than 48 hours until the opening up the WWDC14 to find out what is really on tap from Apple.

Apple’s WWDC is set to kickoff on Monday June 2nd at 1pm EST and nowhereelse.fr just published a video that captures what appears to be a practice run of the WWDC14 slide show inside the Moscone Center in San Francisco.  I grabbed the 3 images that were available from the slide show video presentation and it certainly looks like the iPhone 6.

 

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The rear of the device from the slide show video looks nearly identical to images of the rear shell that were released from http://www.macfixit.com.au just 2 days ago.

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Monday’s WWDC may just be a bit more exciting than most people thought if Apple is going to surprise nearly everyone with the release of the iPhone 6.

 

 

 

 

 

 

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The city is Mesa is set to delegate the operational rights of the Mesa sapphire plant sub zone to GTAT on Monday. Up to this point the city of a Mesa has acted as the grantee of the Mesa sapphire sub zone operations under approval that was granted in March 2014. According to the FTZ, the grantee (city of Mesa) has maintained the greatest direct control over the sapphire plant zone operations. The grantee also directly bears responsibility and Customs liability for the Zone’s operation.

GT as soon as Monday June 2nd may take direct control over the sapphire plant zone operations as well as direct responsibility for FTZ Customs liability. On May 20th GT posted a new job titled “Foreign Trade Zone administrator” to “Provide FTZ and import/export compliance training for all personnel working within the zone and at certain other locations”.

GT’s November SEC filing indicated that the company expected to receive the final prepayment in April. Stephen Chin of UBS, in his recent report published earlier this week indicated that the delayed receipt of the final Apple prepayment might be due to significantly more furnaces being installed at the Mesa facility versus his original estimates.

We believe one of the reasons that GT has not received its 4th prepayment from Apple yet (originally estimated the 4th and final would be paid by end of last month) is that there could be around 2,000 furnaces being installed (about 30% more than we originally estimated)

The transfer of the sub zone operations from the grantee (city of Mesa) to GT Advanced Technology on Monday June 2nd might be the final hurdle required before Apple releases the final prepayment of $138 million to GT Advanced. The final prepayment from Apple could be received as early as next week. The Mesa plant is expected to be completed in June.

Next week is setting up to be a very interesting week for GT Advanced Technologies.

Apple’s WWDC begins on Monday June 2nd.

GT is expected to be granted operator status over the Mesa sapphire operations sub zone on June 2nd.

GT’s annual stockholder meeting is scheduled on June 4th.

The final prepayment of $138 million from Apple could be received by GT as soon as next week.

Selecting an Operator (FTZ Website)

For businesses to use the Zone, save money, and expand or keep their operations in the community, the Zone must be fully operational.

Upon a grant of authority, the Grantee must address the processes of administration and operation of the Zone.

Some Foreign-Trade Zone Grantees elect to operate their General Purpose Zone themselves. In doing so, the Grantee maintains the greatest direct control over Zone operations, yet also directly bears responsibility and Customs liability for the Zone’s operation.

Disclosure: I am long GTAT

 

Reminder: My PTT Research Forensics Newsletter that is scheduled to be published on Thursday June 5th at 3pm EST.

My Forensics Newsletter pricing is now available and a special 20% launch discount (for the first 48 hours) will be available when my Forensics Newsletter subscription goes on sale on Monday June 2nd at 12pm EST.

If you were wondering what my next pick will be. Here is my sneak peek summary:

My next pick is a company that is built on top of a strong foundation of intellectual property. My analysis of the company’s data and public comments indicate that a “major ramp” in future sales is just getting underway. The company’s C-suite is in the process of scaling up the business and preparing to manage a much larger and more complex company. The company has quietly created an integrated eco-system comprised of software and hardware that continues to extend its competitive edge over its largest competitors. The industry that the company primarily supports is in the early stages of what is expected to be an explosive and long-term growth cycle.

 

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According to the Foreign Trade Zone website GT Advanced is expected to receive final sub zone approval as an operator on Monday.

AZ Central did a great job breaking down what this approval actually means for GT Advanced and Apple.

“Sometimes it might not be a duty-deferral issue, but more the fact that it (a foreign-trade zone) can provide a logistical supply-chain benefit,” Joachim said. “In the case of GTAT and Apple, they have a particular type of material that they’re going to be bringing in from elsewhere, and the foreign-trade zone is a unique opportunity for them to bring that manufacturing and that material to the United States.”

As the plant inches closer to completion, the Mesa City Council is poised to approve one such step, an operator agreement that would offer GTAT a competitive advantage via the creation of a foreign-trade subzone.

Though the Foreign-Trade Zones Board approved the subzone in March. the city can act only as a grantee, not an operator.

That’s where the operator agreement, expected to be approved Monday, June 2, comes in.

“Customs actually comes out and inspects the facility and makes sure their security is appropriate, they know how to handle the materials, who will be there when they need to receive things,” said Scot Rigby, Mesa’s senior project manager for the Gateway area.

Joachim already has received a few parts of the activation application, he said, and expects a formal submittal “in the very near future.”

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Brian Blair of Rosenblatt Securities May 27th report on the Asia supply chain spotted iWatch models with sapphire screens. Blair also indicated that TPK will make the touch panel for the iWatch. If Blair is correct that TPK will make the touch panel is it nearly a guaranteed lock that the iWatch will feature sapphire cover glass, which will serve as another catalyst for shares of GT Advanced Technology (GTAT).

TPK as it is the major supplier of the touch-on-lens (TOL) process that is required to work with sapphire-based cover glass. Apple’s WWDC begins on Monday June 2 and if Apple wants to introduce the iWatch you can expect GTAT and sapphire cover glass to be a major part of it.

 

Disclosure: I am long GTAT

 

Reminder: My PTT Research Forensics Newsletter that is scheduled to be published on Thursday June 5th at 3pm EST.

My Forensics Newsletter pricing is now available and a special 20% launch discount (for the first 48 hours) will be available when my Forensics Newsletter subscription goes on sale on Monday June 2nd at 12pm EST.

If you were wondering what my next pick will be. Here is my sneak peek summary:

My next pick is a company that is built on top of a strong foundation of intellectual property. My analysis of the company’s data and public comments indicate that a “major ramp” in future sales is just getting underway. The company’s C-suite is in the process of scaling up the business and preparing to manage a much larger and more complex company. The company has quietly created an integrated eco-system comprised of software and hardware that continues to extend its competitive edge over its largest competitors. The industry that the company primarily supports is in the early stages of what is expected to be an explosive and long-term growth cycle.

 

GTAT’s Recent Insider Selling

Each and every week I have been asked about insider selling and my answer has more or less been the same, “It doesn’t bother me”.  I do believe GTAT’s insider selling is partly a function of share price appreciation after two years without share price appreciation.  The other important item to consider is that a majority of the C-Suite compensation is tied up in stock grants that vest over time.  However, if you want to truly understand the overall amount of C-suite’ skin in the game it is important to not only look at the current vested shares but also the shares that have not vested.

If you looked closely at GTAT’s proxy information specifically page numbers 50 and 51, you would have noticed a nice schedule that details the number of non-vested shares for the executive team.

C-Suite “Non Vested” Shares

Thomas Gutierrez (CEO)- holds over 1.1 million shares that have not vested

Richard Gaynor (CFO) – holds over 379,700 shares that have not vested

Dan Squiller (COO) – holds over 746,000 shares that have not vested

Conclusion and Support 

The number of shares that have “not vested” for GTAT’s C-Suite truly staggering (see images below).  There have been several reports recently of insider sales of 100,000 or 200,000 share blocks at a time but those sales should not outweigh the fact that GT’s C-Suite has millions of dollars of “skin” still invested in the game.  The astounding amount of “non-vested” C-Suite shares should only give investors even more faith in management’s focus to increase shareholder value.  Management’s focus on the medium to long-term will not only increase the value of the C-Suite “non-vested” shares but also increase the net worth of GTAT longs, who plan on holding the stock over the next few years.

 

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Disclosure: I am long GTAT

 

Reminder: My PTT Research Forensics Newsletter that is scheduled to be published on Thursday June 5th at 3pm EST.

My Forensics Newsletter pricing is now available and a special 20% launch discount (for the first 48 hours) will be available when my Forensics Newsletter subscription goes on sale on Monday June 2nd at 12pm EST.

If you were wondering what my next pick will be. Here is my sneak peek summary:

My next pick is a company that is built on top of a strong foundation of intellectual property. My analysis of the company’s data and public comments indicate that a “major ramp” in future sales is just getting underway. The company’s C-suite is in the process of scaling up the business and preparing to manage a much larger and more complex company. The company has quietly created an integrated eco-system comprised of software and hardware that continues to extend its competitive edge over its largest competitors. The industry that the company primarily supports is in the early stages of what is expected to be an explosive and long-term growth cycle.

 

 

GTAT – Stifel analyst report highlights

Posted: May 29, 2014 by mattmargolis24 in Uncategorized
Tags: ,

“There is no exclusivity between GT to Apple with regard to Hyperion Output”

GT’s focus on sapphire foil production and lamination has a path to mobile applications in our view

Current estimates are now $678m 2014, 1,332m in 2015 and 2,069m in 2016. EPS estimates $0.07 in 2014, $0.65 in 2015 and $1.64 in 2016.

The firm maintains a $20 PT on shares of GTAT

Key call outs

Merlin % of revenue : 2% in 2015 and 5% in 2016.

Hyperion % of revenue: 1% in 2015 and 4% in 2016.

Sapphire Materials % of revenue: 55% in 2014, 74% in 2015 and 49% in 2016.

ASF Furnaces % of revenue: 28% in 2014, 10% in 2015 and 8% in 2016.

I’m very excited about my “next pick” that will be published in my PTT Research Forensics Newsletter that is scheduled to be published on Thursday June 5th at 3pm EST.

My Forensics Newsletter pricing is now available and a special 20% launch discount (for the first 48 hours) will be available when my Forensics Newsletter subscription goes on sale on Monday June 2nd at 12pm EST.

If you were wondering what my next pick will be. Here is a sneak peak summary:

My next pick is a company that is built on top of a strong foundation of intellectual property. My analysis of the company’s data and public comments indicate that a “major ramp” in future sales is just getting underway. The company’s C-suite is in the process of scaling up the business and preparing to manage a much larger and more complex company. The company has quietly created an integrated eco-system comprised of software and hardware that continues to extend its competitive edge over its largest competitors. The industry that the company primarily supports is in the early stages of what is expected to be an explosive and long term growth cycle.

Matt

CNBC is reporting that Brian Blair of Rosenblatt Securities May 27th report on the Asia supply chain spotted iWatch models with sapphire screens.

Additionally, the same report said the upcoming iPhone 6 would use sapphire glass from GT Advanced.

On May 23, 2014 leaked images surfaced from nowhereelse.fr of what appears to be Apple’s iPhone 6 LED backlight.Image

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The earliest leaked iPhone 5s backlight images that I could find were leaked on September 7th, 2013 just 3 days before the iPhone 5s invite went out.   The iPhone 5s backlight images were also leaked first by nowhereelse.fr.

In other news Vodaphone just slashed the price of the iPhone 5c on Friday. Target just dropped the price of the gold iPhone 5s to just $119.99 from $199.99 with a 2 year contract.    Walmart was the first to offer aggressive reduced pricing of the iPhone 5s to $119.99 back in March.  Radioshack in April reduced the price of the iPhone 5s to just $99.99 and the price remains intact today.

The wave of iPhone 5s price cuts fall line very closely with an International Business Times article from January, which indicated that Apple will slash the price of 5s by $100 in May 2014.  The IBT article also mentioned a possibility of a May and September iPhone 6 release schedule based on news picked from South Korea.

Conclusion

The wave of iPhone 5s price cuts and the most recent leaked image of the iPhone 6 backlight indicates that production is underway and release of Apple’s iPhone 6 could come anytime.  At this point I’m not expecting a iPhone 6 release at Apple’s WWDC that begins on June 2nd, but every data point seems to indicate that the iPhone 6 release is coming before September.

 

 

My Previous Articles on related to the iPhone 6 release date

https://margolismatt.com/2014/04/20/a-review-of-apples-supply-chain-management-indicates-a-june-iphone-6-release-is-likely/

https://margolismatt.com/2014/04/21/iphone-5s-price-slashing-activity-is-pointing-towards-a-june-iphone-6-arrival/

https://margolismatt.com/2014/04/27/apples-2014-wwdc-solar-charging-products-and-better-film/

https://margolismatt.com/2014/05/11/several-apple-analysts-believe-the-iphone-6-will-arive-as-early-as-june/

 

Disclosure: My premium PTT Research Forensics Newsletter is scheduled to launch on June 2nd. The premium paid service option will grant my paid subscribers exclusive content weeks before my analysis is published on Seeking Alpha, the Obscure Analyst blog or any other website.  Another advantage of PTT is the subscriber Forum that allows sharing of ideas and analyst Q&A. Did you know, that subscription based investment newsletter are typically tax-deductible?

 

Additional Disclosure: I am long GTAT (Apple’s newest Sapphire supplier)

 

I’ve been working diligently on my PTT Premium Forensics Newsletter launch.  I’ve rolled up my sleeves (well not really) since I hate long sleeve shirts, but needless to say I am very deep in my research on my next great investment pick.  I’ve been gathering as much information as I can to understand everything that has happened over the last few years as well as digging into the “data” on this company.  The information and data points will give me context of where this company came from, where it is going as well as the various “treats” investors should be expecting over the remainder of the year and into the future.

My favorite part of researching is learning.  My second favorite part of researching is sharing.  My final favorite part of researching is sharing what I learned with people, who want to profit from it.  Every time I dig into my research it takes me places I didn’t know existed so my end product is typically more in depth than my own expectations. I am very excited to share my next great investment pick with my premium PTT Research Forensics Newsletter subscribers on June 2nd!

 

 

Disclosure: My premium PTT Research Forensics Newsletter is scheduled to launch on June 2nd. The premium paid service option will grant my paid subscribers exclusive content weeks before my analysis is published on Seeking Alpha, the Obscure Analyst blog or any other website.  Another advantage of PTT is the subscriber Forum that allows sharing of ideas and analyst Q&A. Did you know, that subscription based investment newsletter are typically tax-deductible?