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GT Advanced Technologies Inc. Message Board

  • hangmaniceman1 hangmaniceman1 Nov 12, 2012 5:01 PM Flag

    Stop-loss kick-in but I was short sighted...

    Gtat's stock volatility and underperformance is due to politics it appears. Below is an excerpt from Saturday's article. I imagine until this issue is fully resolved Gtat's stock would continue to underperform... I would imagine today's drop was probably related to Chinese Commerce Ministers comments Saturday... This article doesn't appear under GTAT but TSL.

    "The U.S. decision to approve steep duties on Chinese-made solar panels could cost American exporters a growing market, Chinese Commerce Minister Chen Deming said on Saturday, adding that he didn't want to see a trade war."

    "The U.S. International Trade Commission voted last week in favor of duties ranging from 23.75 percent to about 250 percent, ruling that a flood of cheap solar panels from China had hurt U.S.-based manufacturers. Similar cases are under way in Germany."

    "If you say I bought your equipment and raw materials but now that I am shipping my products you want to pop on a 249 percent tariff, fine then, buy why should I buy any more of your raw materials or equipment?" Chen told reporters on the sidelines of the 18th Communist Party Congress that will anoint the next generation of Chinese leaders."

    "Chen valued the solar panel manufacturing equipment bought from the United States at over 40 billion yuan ($6.41 billion), and from Germany at "billions of yuan"."


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    • Minister Chen Deming said he did not want a trade war any chance duties on Chinese will be renegotiated or will things just get worse

      Sentiment: Hold

      • 1 Reply to thepenquin73
      • Now that the election is over for both countries, I would imagine that the chance of two sides coming together, in some manner or form, is greater. Gtat is an unfortunate victim of the brewing trade war between U.S. (West) and China. I would imagine that China will appeal to the World Trade Organization for U.S.'s unilateral actions, justified or not, but the process takes time.

        Meantime, barring eleven hour compromise or gesture of some sort from U.S. signaling its willingness to negotiate, it is likely that China will resort to some form of retaliatory actions against U.S. (companies or sector)--not necessarily against Gtat--but Gtat is too close to the fire not to get burn.

        Another question that needs to be answered is what other choices Gtat's current Chinese customers have, if any at all. If they don't buy the equipment from Gtat or other American companies, who can they turn to? If there are other non-American companies they can turn to or--if there are domestic Chinese companies who can produce these equipment, it is likely that ensuing trade war with China in the solar space could be very harmful to Gtat.

        It is also possible that China will start-up a company of their own, and I will be very surprised if they haven't already, to acquire the knowhow and to produce needed equipment domestically. If we consider the speed at which Chinese dominance of world solar sector and clean energy took place, this possibility should garner a serious consideration. Furthermore, Gtat could also consider opening a manufacturing plant in China.

        Another question is how well diversified Gtat’s current sources of revenue, not only in terms of products and services but also by country and customer. I realize that diversifying revenue stream has been Gtat’s goal and strategy to certain extent but Gtat is primarily a solar equipment manufacture. Therefore, Gtat’s degree of revenue dependency from China will decide extent of injury going forward, etc.

        For those who can hold for longer duration, I have no doubt that Gtat's stock price will recover and some. I also would like to believe that some sort of compromise can be reached that we all can live with. Yet, there is no doubt that U.S. has drawn the first blood and China cannot lose face unless U.S. affords China a way out without losing face. However, if “fiscal cliff” is any reminder, we like to get things done in a grand manner, but what we need is finesse—not a trade war.

        In my opinion, the first one to draw the blood already lost the battle. I am not sure if tariff was the right approach or the solution to the problem. What this experience tells me is that we need to get serious and be proactive instead of being reactive.

        It is hard to find shares to short Gtat--which tells me that this is not an everyday short trader. Yet, usually, bigger they are, harder they fall…but everybody has to wait for their turns.

    • you give me hope for humanity, hangman

10.83-0.44(-3.90%)Sep 30 4:00 PMEDT

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