Is GT Advanced Technologies Inc (GTAT) Undervalued? – Veeco Instruments Inc. (VECO)

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What now?

In additions to the solar industry’s struggle, Chinese players are facing extra challenges from trade barrier and their unsustainable cost structure, and so GT Advance Technologies is trying to diversify geographically. It is going after Korea and other South East Asian solar and LED players.  In 2012 its revenue from Korea doubled compared to 2011.

(% of total revenue)
2007 2008 2009 2010 2011
China 87% 62% 63% 71% 52%
Korea 0% 20% 13% 13% 25%
other Asian countries 10% 5% 6% 9% 18%
Europe 1% 10% 18% 6% 3%
US 1% 2% 2% 1% 1%
Other 0% 1% 0% 0% 0%

GT’s strength has always been its superior technology.  It is investing in next generation technology which will help its customers to reduce the cost of manufacturing.  The solar industry is here to stay, but it will be slow going as it learns to survive without subsidies. There might be more bankruptcies, but at the end there will be survivors. Those panel makers will need equipment to reduce their manufacturing costs, and GT Advance Technologies will provide that. In September, the company raised $202 million in convertible debt, and it still it has a strong balance sheet.  By cutting work force, and idling its manufacturing but still investing in next generation technology, it is preparing itself to weather the downturn. That’s why this company is worth considering for the long term.

The article Is This Solar Equipment Provider Undervalued? originally appeared on and is written by Shobha Narasimha.

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