Jilted Apple 'sapphire' glass partner files for bankruptcy

GT Advanced Technologies (GTAT), the company company jilted by Apple in bringing hardened glass to iPhones, filed for bankruptcy protection Monday.

Shares of the company dropped $10.13, or 92%, to 92 cents a share.

Investors widely speculated GT Advanced would be providing special durable glass for the iPhone 6. But after the announcement of the new phone, investors were stunned that the product was noticeably left out. Shares of GT Advanced lost more than a third of their value since the Apple announcement. Apple decided to use hardened glass from GT Advanced rival Corning instead.

GT Advanced reported revenue of $58 million during the quarter ended June 2014, down 65% from the same period a year ago. The company lost $86.4 million during the June quarter.

The downfall of GT Advanced underscores the risky proposition of relying too much on a big, powerful company like Apple. The company was in a difficult financial condition, but its only savior was the contract with Apple, says Nicholas Yee, analyst at stock research firm Gradient Analytics. 'Bookings and backlog were all trending highly negative, company had massive inventory issues,' Yee says.

Yee says Apple had been planning to use GT's so-called sapphire glass in the iPhone 6. But manufacturing issues were a problem and prompted Apple to choose another glass vendor.

Investors had plenty of warning of the company's troubles, if they knew where to look, Yee says. Officers and directors have been selling the stock, even before the negative announcements. 'A big red flag has always been the insider selling with this name,' Yee says.

'I found it highly nefarious that management continued to sell at highs for the stock around $18-$20,' Yee says. 'Specifically, the CEO sold about 75% of his total share amount from the end of last year until this summer when the stock was still at highs.'

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