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Apple Supplier GT Advanced Tech Raises Outlook

Monday, 04 Aug 2014 06:50 PM

Solar and LED equipment maker GT Advanced Technologies Inc. raised the lower end of its full-year 2014 adjusted profit forecast, citing higher gross margins for the second half of the year.

Shares of the company, which reported second-quarter results below analysts' estimates, rallied 12 percent in extended trading at $15.84.

"They made a deal with Apple in December, and there was speculation that the deliveries might be significantly delayed," Gilford Securities analyst Nimal Vallipuram said.

"It looks like there is no significant change in their relationship with Apple."

Apple said in November last year that it will open a manufacturing facility in Arizona in partnership with GT Advanced to make sapphire materials for its popular electronics devices.

Sapphire glass, which is slightly less hard than diamond, could make Apple's products scratch resistant and nearly unbreakable, making it ideal for smartphone displays.

"We have continued to see strong interest in our suite of sapphire production tools," Tom Gutierrez Chief Executive of GT Advanced said in a statement.

He added that the sapphire business accounted for 75 percent of the company's total revenue during the quarter, with a larger part of it coming from the sale of sapphire production equipment.

"Sapphire material sales to Apple have low gross margins so if you reduce that then equipment sales has higher gross margin, and they (GT Advanced) are seeing pretty high demand for sapphire equipment," Pacific Crest Securities analyst Weston Twigg said.

The company also said it expects to meet certain operational targets and receive the final $139 million prepayment from Apple by the end of October 2014.

FORECAST UPBEAT

GT Advanced on Monday raised the lower end of its full-year profit forecast to 12-18 cents per share, up from the previous range of 2-18 cents. The revised forecast handily beat average analysts' expectation of 3 cents per share, according to Thomson Reuters I/B/E/S.

However, the company cut the top end of its revenue forecast by $100 million It now expects revenue to range between $600 million and $700 million for the year.

The company reported a bigger-than-expected loss and lower revenue for the second-quarter ended June 28, 2014.

The company reported a net loss of $86.4 million, or 63 cents per share, compared with a profit of $11.9 million, or 10 cents per share, a year earlier.

On an adjusted basis the company reported a loss of 16 cents per share.

Revenue fell more than half to $58.0 million from $168.3 million a year earlier.

Analysts were expecting a loss of 14 cents per share on revenue of $63.9 million.

GT Advanced's shares closed at $14.12 on the Nasdaq on Monday.

© 2017 Thomson/Reuters. All rights reserved.

 
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Solar and LED equipment maker GT Advanced Technologies Inc. raised the lower end of its full-year 2014 adjusted profit forecast, citing higher gross margins for the second half of the year.
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2014-50-04
Monday, 04 Aug 2014 06:50 PM
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