Here’s Why You Shouldn’t Abandon GT Advanced Technologies Inc (GTAT)… Yet

Page 1 of 2

No matter how the bulls try to spin it, GT Advanced Technologies Inc (NASDAQ:GTAT)‘s  fourth-quarter and full-year 2012 earnings were ugly, plain and simple.

The numbers
For the quarter, revenue fell 33% from the year-ago period to $102.3 million, helping GTAT achieve an eye-popping net loss of $159.4 million.

GT Advanced Technologies Inc (NASDAQ:GTAT)Of course, it’s important to note those scary numbers incorporate nearly $162 million in one-time charges, including a nearly $72 million “write down of inventory and related charges” due to prevailing poor photovoltaic (PV) market conditions, $57 million “related to the impairment of goodwill related to the PV business,” and a $2.5 million hit from “certain sapphire materials assets acquired with the acquisition of the business which are now obsolete.” Ouch!

If we put these big charges aside, however, GT Advanced Technologies Inc (NASDAQ:GTAT) actually managed a slightly more respectable adjusted net loss of just $18.1 million. Interestingly enough, the folks at GTAT weren’t surprised in the least, with CEO Tom Gutierrez asserting:

Our Q4 results came in largely as expected as we continue to face challenging conditions in the solar and LED markets. We have taken steps to resize the business and manage our balance sheet and believe 2013 will be a year during which we continue to strengthen our foundation and further diversify the business.

As fellow fool Travis Hoium pointed out last week, while solar specialists including LDK Solar Co., Ltd (ADR) (NYSE:LDK) , Trina Solar Limited (ADR) (NYSE:TSL) , and Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) have historically been some of GTAT’s largest solar equipment buyers in the past, few are currently in the financial position to make additional investments in the company’s latest HiCz technology. Indeed, as the solar industry has continued to crumble over the last two years, shares of LDK, Trina, and Yingli have fallen 78%, 77%, and 87%, respectively.

What’s more, even GTAT’s customers who do have cash to purchase new equipment have been kept on the sidelines as the result of unresolved international trade tensions in the solar sector. Even still, Guiterrez also mentioned during the conference call he sees evidence that their “largest customers’ access to government and commercial capital is likely to improve over the next several quarters.” Considering HiCz will help the likes of LDK, Trina, and Yingli even further decrease the cost and increase overall efficiency of solar cells going forward, its a safe bet GT Advanced Technologies Inc (NASDAQ:GTAT) remains nicely positioned to profit when market conditions finally improve.

For now, however, with the current oversupply helping to extend the deterioration of GTAT’s core business, its shares currently trade hands more than 80% below the all-time high mark set less than two years ago. It’s reassuring, then, that the folks at GTAT have no delusions that market conditions will improve in the near future. As a result, the company plans to delay any significant expenditures related to market introduction of their HiCz product until 2014, at which time they believe market demand will finally drive adoption.

The potential
For its part, GT Advanced Technologies Inc (NASDAQ:GTAT) still isn’t content to rest on its laurels. To the contrary, the company is working diligently to continue diversifying its business away from solar and further toward the growing sapphire segment. Sure enough, it expects more than half its 2013 revenue to come from its sapphire business, with the bulk of that arriving during the second half of the year. Fortunately, these expectations are bolstered by the fact that $716.5 million of GTAT’s $1.25 billion backlog at the end of 2012 was attributable to the sapphire segment, with around 2/3 driven by LED and industrial solutions and the remaining third to come from emerging applications including potential low-volume smartphone and camera lens adoption.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!