Source: SEC
If the timing of the Apple announcement was not material, executives should have held their shares. The sale is a small amount, but holding the shares would signal that management was confident the value of the company would rise.
2) Update on Merlin initiative
On its Q2 conference call on August 5, the CEO indicated that the response from partners and potential customers for Merlin was strong. During the quarter, the company successfully completed the performance, safety, and quality testing phase. GTAT shipped samples to several customers and was in active discussions with them. There is a high likelihood that the company will announce signed deals with them on September 29th.
Merlin offers great potential for revenue that current shareholders are ignoring due to the iPhone-sapphire disappointment. If 20 percent of the PV market adopted Merlin, it would mean $1 billion in revenue for GTAT.
3) No major update on Hyperion initiative
Hyperion is a tool that is involved in producing ultra-thin sapphire, silicon laminates, silicon carbide, or templates. GTAT thinks it could get its first order for BNCT Hyperion accelerator in 2014. However, a commercial deal probably will not happen until later in the year.
4) No change in earnings guidance
To the surprise of many bears, GTAT may not lower its non-GAAP forecast of $1.50 per share for 2016. Revenue from all initiatives will be more meaningful in 2015. It is possible that the company will lower 2014 revenue estimates, but unlikely. Still, this would happen if a delay from producing sapphire at high enough yields was one of the reasons Apple delayed the release of its Apple Watch.
Investors should expect product delivery in Q3 and Q4 to materialize. This means that while Q3 may meet forecasts, Q4 will be even stronger.
5) Re-affirming healthy balance sheet
To re-assure investors, GTAT may reiterate that it has a healthy balance sheet. The company forecasted $400 million in cash by the end of this fiscal year.
Bottom line: sapphire a 2016 story
Investors are understandably disappointed GTAT is not supplying sapphire for iPhone screens. Manufacturing and ramping up production of the material takes time, but Hyperion and Merlin are even more meaningful for the company. Sapphire was unusually a higher percentage of total revenue (at 80 percent). This will not be GT Advanced's revenue mix once development for its other products complete and are ready for shipment.
Ironically, the stock might rally on no new news for sapphire. Speculators who bid the stock will take a loss. Investors with a one to three-year time horizon will eventually reap the reward.
