"In finance, a convertible bond or convertible note (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value."
So if I got it right, that line in the press release only means they are not forced to issue the actual shares, they can pay out the market value of such shares in cash (or some mix of shares and cash). But if the shares are going where we think they do, then by 2017/2020 it's going to be very expensive for them - it's essentially like immediately buying back the shares right after they get converted.
really? you mean they can just pay them off in cash and not have to issue any additional cash? Why does it say in the 10K, for example "The 2017 Notes are not redeemable by the Company" if they can do that? Wouldn't it mean the bonds aren't really convertible, since the company will either prefer to pay it off for cash (if stock is more valuable) or HAVE to pay it off for cash (if stock is below the conversion price)? and then it becomes an empty distinction. Am I missing something?
but they also can't prevent bond holders from converting the notes into shares if they choose to do so. It is like the bonds have a built-in call option at a certain strike.
They get stock if that is worth more than the face value of the bond, the pps when the two are equal is the "strike" of the hypothetical call option. The TL;DR version of it is $7.71 for 2017 bonds, ~$12 for 2020, but read prospectus of each issue of bonds for details. Keep in mind GTAT also hedged the 2017 bonds to increase the effective strike on them to around $10 (they are holding what amount to a call spread between the two price levels).
If anyone finds errors in this reply please post a correction. I want to make sure I understand it properly.
even if such a thing really occured it would be immaterial to whether or not GTAT is priced correctly at $17.xx at present.
What I wrote is just a random musing on one of several different ways to exploit the market system unethically. It's much more about the general idea of it that bothers me; in any case I have no grounds to accuse anyone with anything. And to clarify, I don't believe such a thing has actually happened.
I just called into question the ability of the SEC (or whoever's responsible for policing these affairs) to detect such things in general, and whether the inside trading laws are broad enough to truly cover everything. This is probably not a suitable board such a discussion as it has nothing to do with GTAT in particular.
do you know securities law? I don't. I never had any interaction with securities regulators (SEC and such) and honestly don't know to what extent they are able to protect the public from any unethical/illegal trading of stock as I've described here. I don't even know if what I've described is in fact illegal. Is it? and don't bother replying with insults. If you actually have an answer, post it.
solars being down around 3-5% isn't helping us either. Well, the solar rally was pretty huge. A correction had to happen sooner or later.
Imagine what if the stock was bought massively @ $12 by the company ordering the project, and is being sold for profit now. The customer is a foreign company, and they could hide this kind of shady dealings under some "front" financial services provider that appears completely unrelated, who would ever know? And even if somebody figured it out, would it even count as "insider trade", when after all they're only a customer of GTAT?
Even under this interpretation, it means that the current guidance leaves more room for an upside surprise if Apple orders a greater amount of product than what is currently estimated. But aside from this minor point, OP does seem to be a sound argument to me.
actually, that was my bad. GT equipment sales have had around 35% margin historically, so more like 80-90c one time profit per share on sale of $330M wort of equipment.
EPS measures a recurring source of income. This deal is worth a one time 20c profit per share, not 20c/year profit per share. Of course it's also an indication that they could make all kinds of other deals as well. In terms of stock price, it is worth "at face value" about 20c times their current price-to-book ratio. Pretty close to how much it actually moved on these news.
yeah last two weeks were nuts. All a stock basically needed was to have fuel cells in the name or in the description somewhere and up 200% minimum.
Good q, I haven't been able to determine this for certain. Also I wonder if this deal was recognized into 2014 revs projections. Wasn't that guided to $600M-$800M total? Perhaps the revenue will come in later than 2014, or maybe they weren't sure they were getting this deal only a month ago?
But AAPL knew exactly what they were doing, pretty sure they were collaborating for this project for a long time. I won't believe they put down a cool $500M on something that was a cat in a sack to them.
So at that point when they knew the techonlogical capability was there, they could have simply negotiated for a buyout instead of announcing the supply agreement to the world. That's the logical choice. If they wanted to buy GTAT out, they'd do it then.
GLW trying to buy out GTAT after badmouthing sapphire so long would just make them seem so pathetic now, I doubt their BoD could take such a decision.
Apple would do it already if they ever intended to. They could have taken over this company so cheap only half a year ago.
As for Corning, it doesn't seem likely, for a number of reasons. Maybe some company like Seimens or AMAT could swallow GTAT.
I wouldn't hold my breath regardless.
The 100% are of the amount of shares outstanding.
The total sum of all positions long and short should add up to 100%.
So if there's a short interest that equals approximately 25% of the total, it means there are a total of 125% long positions as well. That is why it's possible for institutions to own more than 100% of "shares outstanding" collectively.
Google "solar cell efficiency" and look in images, there's a lot of copies of the same chart generated by NREL which shows efficiency records over time for various technologies.
When you factor in manufacturing cost, it gets more complicated. Concentrating PV has already reached 40%+ efficiency at the cell level a long time ago, but apparently they still lose out in cost-efficiency against traditional options at the module level.