Source: Social Security Administration.

As you approach retirement, one number becomes incredibly important. Known as your "primary insurance amount," this figure plays a central role in determining the size of your monthly Social Security checks.

In short, your primary insurance amount represents what you will receive in benefits if you wait until reaching full retirement before applying for Social Security.

Calculating your primary insurance amount
To determine your primary insurance amount, the Social Security Administration uses a three-tiered formula based upon your 35 highest income-earning years, adjusted for inflation.

For instance, if you become eligible for benefits this year, the formula takes 90% of your first $816 in average indexed monthly earnings. It then adds 32% of your average indexed monthly earnings between $816 and $4,917. Finally, it adds in 15% of any earnings above that.

Source: Social Security Administration.

This is a highly progressive formula that seeks to ensure that people with lower lifetime earnings nevertheless have adequate supplemental support in retirement.

The primary insurance amount is not a ceiling
This shouldn't be interpreted to mean your primary insurance amount is the maximum that you can receive in monthly benefits when you retire. Instead, it's a benchmark that the Social Security Administration uses then calculate your exact benefits based on when you apply for them.

Assuming you've accumulated sufficient credits to qualify for Social Security benefits, you can theoretically take them at any time between the ages of 62 and 70. But there's a catch. Namely, if you take benefits before reaching your full retirement age, then they'll be less than your primary insurance amount. And if you wait until after full retirement, your benefits will be larger.

In this sense, your primary insurance amount is like a pivot point around which your true benefits are "actuarially adjusted." Here's how the Social Security Administration explains this point:

Let's say your full retirement age is 66 and your monthly benefit starting at that age is $1,000. If you choose to start getting benefits at age 62, your monthly benefit will be reduced by 25% to $750 to account for the longer period of time you receive benefits. This is generally a permanent reduction in your monthly benefit.

If you choose to not receive benefits until age 70, you would increase your monthly benefit amount to $1,320. This increase is from delayed retirement credits you get for your decision to postpone receiving benefits past your full retirement age. The benefit amount at age 70 in this example is 32% more than you would receive per month if you chose to start getting benefits at full retirement age.

Here's a chart I often share to illustrate this point -- for the record, it assumes a primary insurance amount of $1,000 and a full retirement age of 66:

Can you trust your primary insurance amount?
All of this is fine and dandy, of course, so long as the Social Security system remains solvent. But what happens if, according to current projections, the main trust fund providing retirement benefits runs dry in 2034?

Even assuming this happens, which I think is highly unlikely, this probably won't have much impact on your primary insurance amount. In the past, policymakers have focused instead on increasing the system's revenues by raising taxes and reducing expenditures by lifting the full retirement age (as you can see in the first chart above). 

The takeaway here is twofold. First, the closer you get to retirement, the more important it is for you to know your primary insurance amount, which you estimate by creating an account on the SSA's website. And second, once you've figured this out, you can then get a better idea about how your age at retirement will affect your monthly benefits for the remainder of your life.

Grocery delivery isn't such a novel idea. Webvan is one of many poster children from the dot-com boom era that quickly flamed out, along with HomeGrocer.com, the larger grocery delivery service it eventually bought out -- both of which ended up in bankruptcy.

Those were the days of heady ideas and impossible valuations. Photo: Flickr user Mark Coggins.

Yet today there are lots of companies doing it, and doing it right, including Peapod, FreshDirect, and Instacart. Grocery stores like Wal-Mart and Safeway see the service as a potential driver of growth and offer delivery themselves, while Amazon.com will deliver groceries (and just about anything else it sells) via its AmazonFresh service.

More surprising is who wants to get in on this newly burgeoning industry: your local mail carrier.

First-class groceries
Understanding the proverb that idle hands are the devil's workshop, the U.S. Postal Service wants to make sure its letter carriers aren't standing around doing nothing while U.S. mail volume steadily declines. According to a proposal submitted to the Postal Regulatory Commission two weeks ago, beginning on Oct. 24 the USPS wants to begin a two-year test of a "groceries and other prepackaged goods" delivery service it calls "Customized Delivery."

The rise of electronic and mobile communications heralds the death of the first-class letter. Data: United States Postal Service.

Since people don't write letters as much as they used to -- first-class mail volume has tumbled to levels not seen since the 1980's -- the agency feels mail carriers may as well deliver your bottle of ketchup and Frosted Flakes.

The USPS points out the grocery delivery business is booming. In its proposal, it says "grocery delivery services are expanding across the nation, with businesses ranging from the nation's largest retailers, to niche operators, to the popular car service Uber entering the marketplace." That has them salivating over new revenue-generating plans at the money-losing agency.

Small pond, big fish
While the USPS is correct about the fast-growing nature of the industry, that doesn't mean it should be allowed to use its monopolistic power for delivering first-class mail to displace private enterprise.

It's already capitalizing on its position to undercut the prices of package delivery services FedEx and UPS , who've been forced to raise rates to offset rising costs. The post office, though, is apparently immune from such market forces, because just weeks after its rivals announced their rate hikes, it applied for and was granted the ability to cut rates between 30%-50% in weight categories that are used the most by e-commerce sites.

FedEx charged it was a blatant attempt to steal e-commerce customers from while UPS said it was subsidizing package delivery with its first-class mail monopoly. Where the USPS was raising rates on mailing out a letter -- hiking them on an "emergency basis" but still managing to lose $2 billion -- it was cutting them where the competition was thickest.

Hungry for more
And now the USPS has its eyes set on the grocery delivery service.

The real rub is that Amazon is actually assisting the USPS in its efforts. They've already tested the program together in the San Francisco area where it recorded 160 deliveries per day for 38 ZIP codes.

From the supermarket to your doorstep. Photo: Flickr user Dan4th Nicholas.

It builds on the partnership Amazon launched with the post office last November to begin package delivery service on Sundays. In essence, the e-commerce leader -- even though it was also forced to raise the rates of its premium Prime delivery service -- is running around FedEx and UPS, saving itself money by using the government's resources.

Down the rabbit hole 
The post office has been a money-losing operation for years. Its default argument has been the losses are caused by a congressional requirement that it prefund 75 years worth of retirement benefits for its workers over a 10-year period, something it says no other agency is required to follow. The General Accountability Office has basically debunked that notion the USPS had such an onerous burden imposed on it, and says it's more a case of semantics. 

The fact is, despite a few spectacular wipeouts at the dawn of the Internet age, the private sector is meeting the needs of the grocery delivery marketplace quite well. An intrusion by the government now using the power of its mandate to deliver mail could end up crowding out smaller, less capitalized businesses.

In the end, government perhaps does best when meeting needs unmet by private enterprise. As even the U.S. Postal Service admits, grocery delivery is a burgeoning industry teaming with competition. 

Apple has had two runs as the dominant player in the K-12 education market. In the late 1980s the Apple II was the first computer many students and teachers ever used, and in recent years the iPad has played an important role in the classroom.

Microsoft , of course, has its place in classrooms as well. Since the price of a PC has always been lower than the price of a Mac, the Windows maker managed to carve out a niche in schools by default.

Now, however, Google has made growing its share of the education market a priority and the strategy is working. Google's Chromebooks are increasingly popular in schools. To capitalize on this momentum, the search giant now offers an impressive array of free tools for education.

This may not have a huge impact on the company's bottom line in the short term, but it's making it so that many young Americans are having their first computer or computing device experience in the Google ecosystem. That coupled with the fact that Chromebooks generally cost less than machines running Windows or Apple's iOS, while much of the "software" for them is free, could lead to a generation that grows up with a different definition of what a computer is.

Apple and Microsoft should be very scared about that.

GeekWire recently asked some kids "Who's better: Apple, Microsoft, Amazon, or Google?" Source: Geekwire

What is Google doing?
In addition to offering Chromebooks, which look like laptops and have full keyboards, Google is offering a variety of freebies to educators. The Google for Education site deftly uses free tools as a way to push schools toward adopting Chromebooks. These tools include unlimited storage for anyone with a Google for Education account (business users pay for the same thing) and Vault, an app for administrators.

"Vault fits on top of all Google Apps, so you can archive all the data flowing through -- Drive files, docs, emails -- and do searches across all of them for specific text strings," Google Education Product Manager Ben Schrom told EdSurge. "A school admin could use it to investigate abuse or bullying."

Like Google has done for regular folks with its suite of productivity apps that serves as an alternative to paid products including Microsoft Office, it's doing for educators with Google for Education. Hook them in with decent, or even good, free products, then leverage their level of comfort in that system to sell devices which work well specifically with those apps.

How much of the market does it have?
At the close of the third quarter of 2013 Chromebooks still lagged behind Apple iPads (43%) and Microsoft Windows-based machines (28%) in the education market according to Futuresource Consulting, but Google's 19% market share represents a meteoric rise. In 2012 Chromebooks had less than 1% of the market, The Wall Street Journal reported.

It appears that much of Google's growth has come at Microsoft's expense since Windows' share was 47.5% for the same period a year earlier. That's something Microsoft has clearly taken notice of. The company has not only dropped the price of Windows for its OEM partners in order for them to be able to offer price-comparable devices, it has also run commercials pointing out the shortcomings of Chromebooks.

An extended version of the Microsoft ad. Source: YouTube 

That strategy may not be working as research firm Gartner predicts that overall sales of Chromebooks "will reach 5.2 million units in 2014, a 79% increase from 2013." Gartner estimates the education sector accounted for nearly 85% of Chromebook sales in 2013.

Can Google keep it up?
Using the education market to launch Chromebooks is a sound strategy. Apple has always been vulnerable due to price and Microsoft has never seemed especially focused on educators. By offering them to schools and supporting them with tons of free apps and software, Google has actually turned the weakness of the Chromebook into a strength.

In a school, one of the challenges of handing a student a Windows-based laptop or an iPad is that they can be used for so many things other than their intended educational purpose. Chromebooks are limited-functionality devices, which makes them easier to control. They also are largely cloud-based, which makes supporting them with less IT help much easier.

Apple has always sold high-end devices at top prices. That strategy will likely see the company maintain some market share by being "best in class," or at least being perceived that way, but that share will slowly erode as good-enough devices work their way in. Microsoft however has a bigger problem since its devices are not perceived as the best, the cheapest, or the easiest-to use, which has led to a rapid fall once a well-priced option came along.

Microsoft is on the right track in making sure there are lower-priced Windows 8 devices on the market, but the company may have waited too long. Microsoft left the door open for Google and it may be hard to close it. 

Intel has managed to build a near-monopoly in the server chip market during the past few years. Competitor AMD has largely become irrelevant, claiming a low-single digit share at best, and Intel's x86 architecture has become the de facto standard in the server world.

International Business Machines , which recently sold its x86 server business to Lenovo, sells servers and mainframes built around its POWER architecture. While many industries are dependent on IBM's mainframes, Intel's x86 architecture has become the king of the data center.

Intel's dominance has allowed the company to extract outrageous profits from its data center segment, and companies like Google, which buys a tremendous number of server chips each year, have little choice but to pay whatever Intel charges for its chips. IBM took the first step toward shifting the balance of power last year with the formation of the OpenPOWER Foundation, a consortium of companies working to make the POWER architecture a viable alternative to Intel's products. With companies like Google, NVIDIA, and Samsung backing the effort, OpenPOWER represents a real threat to Intel's lucrative server business.

The plan to take down Intel
IBM is licensing its new POWER8 architecture, as well as all previous versions, to members of the OpenPOWER Foundation. Companies will be able to design their own POWER8 chips, and have them manufactured at the foundry of their choice, as well as design other server components that will tightly integrate with the POWER8 processor.

IBM recently announced the first servers under the OpenPOWER initiative, which include a GPU accelerator card from NVIDIA, and run the Ubuntu Linux operating system. Canonical, the company behind Ubuntu, is also a member of the OpenPOWER Foundation.

IBM's POWER8 chips are extremely powerful, and the company claims that the ability of the chips to tightly integrate with coprocessors from NVIDIA and other companies give POWER8 servers the ability to analyze certain Big Data workloads up to 1,000 times faster than comparable x86 systems. The advantage is much smaller when considering just the processors themselves, but IBM's POWER8 chips are still more powerful than Intel's offerings on a per-core basis.

It will take more than just a powerful processor to challenge Intel; but with support from big companies like Google, which would likely benefit if it could replace Intel chips in its data centers, POWER8 has a real chance of ending Intel's server dominance.

Intel's outrageous profits
Since 2007, the average selling price of Intel's server chips has risen by 47%, from $429 to $629. This is the opposite of what typically happens in other chip markets, where there's at least some competition. It's obvious why Google is supporting an alternative to Intel's server chips.

The rising price of Intel's server chips has allowed the company to achieve margins in its data center business that are truly extraordinary. During fiscal 2013, Intel managed an operating margin of 46% in its data center segment, compared to only 36% in the company's PC segment. This enormous operating margin represents an opportunity for IBM, and if POWER8 servers can offer better value to enterprise customers, Intel may not be able to maintain this level of profitability in the long run.

Even if Intel doesn't lose very much market share, the competition may force the company to lower prices, and that would negatively affect the company's bottom line. While Intel derives more than twice the operating income from its PC segment as it does from its data center segment, server chips represent a larger growth opportunity compared to the stagnating PC market.

Final thoughts
It's difficult to predict whether IBM and its partners will be able to win a significant amount of market share from Intel. The level of support behind the OpenPOWER Foundation leads me to believe that IBM has a real chance at ending Intel's server chip monopoly. If that happens, the days of 46% operating margins for Intel's server business could be coming to an end.

Apple thinks spending $10 per month on a premium music subscription is too much for the average listener. The average music consumer spends only around $60 per year on CDs, vinyl, downloads, and streaming services. What's more, that's been true for the last 15 years when we've seen a huge transformation in the music industry. That's why Apple is talking with record labels to revamp its Beats Music service with a lower price. 

When Apple approached record labels at the turn of the century to unbundle the album and sell individual song downloads through the iTunes Store, the labels were quite hesitant. Even with their industry spiraling downward, Apple had to work hard to convince them that digital downloads would ultimately benefit them.

Now, in the age of music streaming, Apple is trying again to convince record labels that they're forcing too high of a price for streaming services like Beats Music, Spotify, and Google Play Music All Access. Even Pandora is forced to charge $5 per month for its Internet radio service in order to make a profit. Can Apple convince them that lowering the price is what's best?

Who sets these prices anyway?
If Apple thinks $10 a month is too much, why doesn't it just go ahead and lower the price? The company can certainly afford to operate Beats Music near break even or take a loss if it helps promote its other products -- like those that end in "phone."

Actually, Apple doesn't set the price. Neither do Spotify or Google or anyone other streaming service. The record labels actually set the minimum price these services are able to charge through their licensing agreements. This makes it practically impossible for a company like Apple to explore the price elasticity of digital music. According to the record labels, there is none -- people either like a song and will pay any price for it, or they don't and they won't.

That's a ridiculous notion, though. Look at music piracy -- the very thing the music industry says is a huge problem for them. When music is free, people will grab it even if they have no desire to listen to it. This is what makes quantifying the impact of music piracy so difficult. One album download does not equal one lost album purchase.

Is it too big of a risk?
Back when Apple was talking with the record labels about the iTunes Store, digital downloads were a minuscule portion of the music industry's revenue. In fact, companies like Nielsen didn't even start tracking digital downloads until a couple months after Apple unveiled iTunes.

Today, streaming represents a large chunk of total music listening. Nielsen's mid-year music report showed that over 20% of U.S. album listens (1,500 streams to one album) are from on-demand music streams. Pandora accounts for 8.9% of U.S. radio listening. And IFPI reported that 28 million people around the world paid for music subscriptions as of the end of 2013. Overall, music streaming is a $1.6 billion industry.

What's more, those subscription rates continue to climb. In 2011, only 8 million people paid for a music subscription. So, the labels face the risk of missing out on revenue and the chance to determine the absolute size of the market at $10 a month should they concede to Apple. It will be very difficult for the labels to maintain their terms with other streaming services if they give special treatment to Apple.

Finding a middle ground
There may be room to compromise. Earlier this year, Amazon.com bundled a music streaming service into Amazon Prime. The service features a select catalog of music that's at least six months old. It's also notably missing Universal's catalog, the largest of the big three labels. It's a very limited catalog, but that also means Amazon is able to bundle it with Prime for no additional cost to subscribers. Still, Amazon's limited catalog and subpar user interface seem to have limited its adoption.

Apple may be able to work out deals with labels to offer a less expensive on-demand service that features a catalog of older songs. And it could certainly improve upon Amazon's user experience. It could bundle this service with iTunes Radio and iTunes Store to round out its catalog with newer songs that aren't yet available on-demand via such a new service. It could also lead to more easily upselling users from the cheaper service to the full-featured Beats Music for $10 a month -- which is what the labels really want anyway.

Apple, with its insider knowledge of digital music consumers, seems to know that charging half the price of current subscription rates will ultimately benefit both the labels and the service providers. It's a tough sell for Apple to make though, considering the risks involved for the labels.

One draw of BDCs is that they tend to hold a majority of their assets in floating-rate debt. Thus, as rates rise, so should a BDC's portfolio yield, and its dividends. But don't be so quick to accept this at face value.

Some nuances affect a BDC's exposure to rising rates, leaving smaller BDCs ill-equipped to handle rate increases.

Two tiny companies with big yields
Two smaller companies, Medley Capital  and THL Credit , hold a majority of their portfolios in floating-rate debt. Medley reports that roughly 66% of its income-bearing assets are floating rate. THL Credit discloses that 63% of its assets are floating rate.

Taken at face value, these look like excellent plays for rising rates.

What most BDCs don't break out, though, is how high rates will have to rise before it affects their portfolios. Most middle-market loans have LIBOR floors. Thus, only when LIBOR crosses a floor -- or a minimum interest rate -- will BDCs begin to collect yields on their investment portfolios.

By compiling data from every single loan held on a BDC's balance sheet we can see how exposed a BDC is to rising rates. 

The chart below shows what percentage of each BDC's floating-rate assets fit within various floor levels:

You can quickly see how Medley Capital and THL Credit differ by their interest rate exposures.

A significant portion (roughly 18%) of Medley's portfolio does not have a floor in place. Thus, with every increase in rates, Medley stands to benefit on these loans. And over two-thirds (roughly 68%) have LIBOR floors less than or equal to 1%, meaning that two-thirds of its loans will yield more when LIBOR rises above 1%.

On the other hand, THL Credit will require much more significant increases in rates to drive interest income. All of its floating-rate investments have LIBOR floors. And a majority of those investments need LIBOR to move toward and above 1% before the company benefits at all. Right now, one-month and three-month LIBOR are both below 0.25%. The move to 1% is a very significant one, which may take months, if not years.

The flip side
Medley Capital and THL Credit, are relatively small in the world of business development companies. As such, their funding costs tend to be higher, and their choices for balance sheet funding are limited.

Unfortunately, this means that a majority of their borrowings are floating rate. Thus, their borrowing costs will rise with LIBOR, and initially their costs will rise faster than the income from their portfolios.

Medley Capital points out that rising rates would help its overall profitability when rates rise two percentage points. THL Credit's portfolio needs rates to rise by three percentage points before the added yield overcomes the added cost of borrowings.

Larger BDCs, which have the benefit of using low-cost, fixed-rate debt tend to have the best interest rate exposures as their investment yields will rise with minimal impact to their funding costs. All in all, if you like BDCs for the floating-rate exposure, you may be better suited for some of the larger industry players that have fixed borrowing costs, rather than a company like THL Credit or Medley Capital. 

Last year, Intel held its 2013 investor meeting. At this investor meeting, Intel's management talked about how many tablet chips it planned to ship during 2014. Further, CFO Stacy Smith discussed the general trend that management expected in the sales of stand-alone cellular modems, particularly as its LTE and LTE-Advanced solutions began to bring in significant revenue.

Notably absent at that investor meeting was any prediction for smartphone applications processor shipments. This is likely due to the fact that design wins for smartphones and tablets are generally worked out pretty significantly in advance. And, unsurprisingly, it doesn't seem that Intel won even a single smartphone design with its Atom Z3400 and Z3500 series of processors.

In fact, CEO Brian Krzanich pointed out in a Sept. 9 PCWorld interview that he would be able to publicly set a target for Intel smartphone processor shipments either in November or December. My expectation is that management will have, at the very least, a preliminary number in place by the Nov. 20 investor meeting.

Who would buy Intel chips?
In that same PCWorld interview, Krzanich gave the following hints:

• Intel should have at least six smartphone manufacturers lined up to use the company's phone chips.
• Krzanich noted that he would "really like to avoid" contra-revenue-like issues with its 2015 products. This implies Intel's 2015 smartphone products will have competitive platform bill of materials costs (as stated at the 2013 investor meeting).
• Krzanich talked up SoFIA 3G and SoFIA LTE for low-cost smartphones. Not a lot of emphasis on the higher end "Broxton' chip.

My guess is that among those six smartphone manufacturers, Intel will score design wins at the following:

• Lenovo
• Samsung
• ZTE
• ASUS

In particular, I would bet on Lenovo due to the fact that the two have already announced a "multi-year, multi-device" agreement for smartphones and tablets. ZTE has used Intel chips in the past and may be willing to give Intel another chance now that its product portfolio and roadmap are, perhaps, more competitive.

ASUS, too, already uses Intel's chips and, like Lenovo, has a multi-year, multi-device agreement in place.

Samsung is a bit trickier. On one hand, Samsung has shown that it is willing to use Intel-designed cellular modems, but it has not used Intel's applications processors (likely as Intel's processors for this market have either been late to market or simply not competitive).

I seriously doubt that Samsung would use Intel-designed high-end applications processors, but for lower end phones in emerging markets Samsung might choose an Intel solution (particularly if Intel is willing to price aggressively).

So, how many will they actually sell?
From what I can tell, both SoFIA 3G and SoFIA LTE should offer solid performance, but probably nothing Earth-shattering. Intel will probably price these very aggressively, which means that they won't be wildly profitable, but they will help to establish Intel as a credible player in the smartphone chip space.

All in all, my expectation is that Intel should be able to capture at least 2-3% of the total smartphone market with these SoFIA products during 2015. I am assuming a negligible presence from Intel at the high end with Broxton, although I hope this assumption proves conservative.

According to Statista, smartphone shipments are expected to total just over 1.2 billion units during 2015. If Intel captures 2-3% of the market during that year, then this would imply between 24 and 36 million units shipped. This seems like a pretty doable goal as long as SoFIA is reasonably competitive.

Foolish bottom line
My expectation is that Intel will gun for at least 24 million smartphone chips shipped during 2015. However, it wouldn't surprise me if Intel got a little more aggressive and aimed for something more along the lines of 40-50 million units (roughly matching up with 2014 tablet chip shipments).

Shipping these chips won't lead to the eradication of the large losses in mobile that Intel is incurring. However, if Intel can get its foot in the smartphone door during 2015, then it can see both unit growth and a cost structure improvement once it moves its SoFIA product line to its in-house chip manufacturing technology in 2016 and later.

Intel doesn't need to get its mobile business profitable in 2015 or even 2016 to make investors happy; it just needs to make real progress in shrinking the loss and becoming a credible smartphone-chip vendor. If Intel finally proves itself here, then investors may be willing to overlook the large near-to-medium term losses in mobile, which could drive the stock price higher.

Microsoft's Surface Mini -- the never-released smaller tablet that was killed off prior to the launch of the Surface Pro 3 -- could still be alive, according to a recent report from TK Tech News.

Source: Wikimedia Commons.

The site claimed the Mini could arrive in limited quantities before Christmas, possibly alongside a new RT-powered Surface 3. A previous review of a prototype Surface Mini at Neowin claimed that it had an 8-inch display and 1GB of RAM, and runs on Windows RT 8.1, although the site did not publish photos of the device.

These reports indicate Microsoft could have a supply of Surface Minis, but doesn't know if it should launch the device. In my opinion, clearing its inventory of Surface Minis (if it exists) at low prices could be a good way for Microsoft to gain a tiny bit of market share in tablets. However, manufacturing more units for an aggressive worldwide launch would be disastrous.

The wrong market at the wrong time
The first issue with launching the Surface Mini is that demand for 7-inch and 8-inch tablets is waning. According to IDC, those smaller devices accounted for 55% of tablet shipments in 2013, but will only account for 44.5% of the market by 2018. The reason is the rise of phablets (5.5-inch to 7-inch phones), which IDC expects to soar 209% year over year in 2014 and account for 14% of the entire smartphone market.

The Surface Mini would also needlessly prolong the life of Windows RT, Microsoft's ARM-based operating system that is incompatible with older x86-based software. Microsoft has been the only maker of Windows RT tablets since last September, after Dell, Samsung, Lenovo, HTC, Asus, and Acer gave up on the OS. Today, the only notable tablets and phablets that still run RT are the Surface 2 and Lumia 2520.

The Lumia 2520. Source: Nokia.

With the upcoming launch of Windows 10, Microsoft made clear that it intends to phase out Windows RT and Windows Phone by merging smartphones, tablets, and PCs onto a single OS. Launching the Surface Mini at this point would be a counterproductive move that doesn't advance this strategy.

Competing against partners and cannibalizing sales
Microsoft has been frequently criticized for competing against its Wintel allies with the Surface. While that might be true, the Surface can also be considered a reference design for companies such as Hewlett-Packard and Dell, which manufactured clumsy Windows tablets and convertibles that repeatedly failed to compete against Apple's iPads.

In April, Microsoft made Windows 8.1 free for tablets under 9 inches to compete against Android manufacturers, which ironically pay Microsoft a patent fee (estimated to be about $1) for every device sold. This led to the launch of cheap Windows 8.1 tablets including Toshiba's $99 Encore Mini and Acer's $150 Iconia Tab 8 W, which cost about the same as low-end Android tablets. Although such Windows 8.1 tablets aren't mobile powerhouses, they can run traditional Windows software instead of the RT's restrictive selection of Windows Store apps.

Toshiba's Encore Mini. Source: Toshiba.

These cheap Windows 8.1 devices could finally help Microsoft grow its footprint in the tablet market, which it only claimed 2% of in 2013, according to Gartner. By comparison, Android held 62% of the market while Apple claimed 36%.

It makes no sense for Microsoft to launch the Surface Mini to indirectly compete against these new Windows 8.1 tablets. The Mini will just confuse customers again regarding the differences between Windows RT and 8.1, and possibly cannibalize sales of the Surface Pro 3 and Surface 2.

A Foolish final word
Microsoft investors should hope the company avoids a wide-scale launch of the Surface Mini. The company made the right call to kill off the device the first time -- demand for smaller tablets is falling, RT is already on life support, and cheap Windows 8.1 tablets are much more promising.

However, if Microsoft sells whatever remains of the Mini at fire sale prices, as HP previously did with the TouchPad and BlackBerry did with the PlayBook, it could be a unique opportunity for consumers to pick up a cheap new tablet. Moreover, the Surface Mini could eventually be upgraded to the ARM-based version of Windows 10, so the device won't end up as outdated as the TouchPad and PlayBook.

Source: GT Advanced.

Sixty-two days. That's the amount of time that passed between GT Advanced Technology's last earnings report and its shocking Chapter 11 bankruptcy filing earlier this week.

When the sapphire maker reported on August 5, there were no glaring indications that a bankruptcy filing was on the horizon. How much did management actually know?

So much for guidance
One possible sign that GT's prospects were deteriorating was the fact that it reduced the high-end of 2014 revenue guidance by $100 million, from $800 million to $700 million. But guidance changes are quite common, in general, so it's not as if shareholders could have taken this data point and extrapolated it to the point of bankruptcy.

There were a few comments in the conference call about the sapphire segment. For example, here's CFO Raja Bal discussing the guidance change:

Moving on to guidance for the year. We are tightening revenue to the lower end of our previous range, and now expect $600 million to $700 million, reflecting our current view of volumes associated with the Arizona project, as well as our expectations for Sapphire equipment shipments for the second half.

We continue to expect more than 80% of the year's revenue to come from our Sapphire segment. While we anticipate significant contribution from both the equipment and materials businesses, the mix of equipment will now be higher than originally anticipated. The mix shift is expected to have a favorable impact on gross margins.

Bal notes that the company's expectations changed, and was forecasting a higher proportion of equipment sales compared to material sales at the time. He also said that 2014 guidance would be "heavily weighted" in the fourth quarter.

CEO Tom Gutierrez then reiterated the guidance that GT would end the year with approximately $400 million of cash on the balance sheet, adding that management did not believe it would need to raise capital from public markets.

So much for "not a world-ending event"
GT failed to achieve the "operational targets" necessary to receive the final prepayment from Apple . Gutierrez seemed rather confident at the time that the company would be able to hit these goals. Without specifying too much, he did add a little bit of context regarding the nature of these targets:

UBS analyst Steven Chin: Thanks for the update. I have a couple of questions on the final prepayment that is expected in October. The first is, even though the final prepayment is not expected until October, can you still ship as much material to the customer even before this sign-off? Or do you still need to wait until the final prepayment is made and you get sign-off before you resume shipments? Just some clarity to start there?

GT CEO Tom Gutierrez: I think you're making a presumption that the milestone is of a nature that is a gate. The milestones are, as the word implies, they are progress based, based on the progress that we've made. And progress has admittedly been slow, due to some of these start-up challenges that we have faced. But there are metrics that were defined before we even started to populate the operations. Some of those metrics morphed over time as the project has gone on.

And they really are -- shouldn't be looked at as a gate. They are indicators of progress versus anything else. And they are under our control. These are things that we have to execute on.

Perhaps more interesting, the executive implied that the company would be fine even if it did not receive the final prepayment (emphasis added):

UBS analyst Steven Chin: Okay, and maybe a follow-on to that. If the final prepayment does not come through by that October time frame, is there an extension possible to that? Or is there -- and is there a scenario where you then might need to raise more cash, if you don't get that prepayment?

GT CEO Tom Gutierrez: I would say that these are milestone-based. And so when you reach the milestone, you get paid. They are not cliffs, per se. And so I feel very confident, based on the progress that we're making, that we will achieve the milestone in that timeframe. But as I indicated with a projection of having close to $400 million in the bank at the end of the year, it's not a world-ending event if it slides. Although, again, I don't anticipate that it will slide.

From a shareholder perspective, Chapter 11 is pretty close to a "world-ending event."

GT was experiencing some challenges getting the Arizona facility up and running. The company took a $45 million hit related to ramping up sapphire production, acknowledging production inefficiencies and inventory losses. That total was greater than expected, and Bal expected an additional $45 million in ramp-up costs in the third quarter.

Still, somehow GT managed to burn through a quarter of a billion dollars in three months, after failing to get the last Apple payment.

Actions speak louder than words
It's also worth noting that insiders have been unloading shares all year. That's not as insidious as it sounds, and certainly management knew how risky the Apple deal would be.

Gutierrez didn't sell any GT stock during 2013, but he did set up Rule 10b5-1 trading plans on December 16, 2013 and March 14, 2014 for "financial diversification." Rule 10b5-1 trading plans allow company insiders to schedule transactions ahead of time, while not in possession of material non-public information, in order to avoid the appearance of insider trading.

The fact that Gutierrez sold $160,000 worth of stock at $17.38 per share the day before the Apple event is actually just a coincidence, as he has no discretion over the timing of the transactions. He still had nearly 170,000 shares after the transaction, but has sold almost 700,000 shares this year worth more than $10 million.

CFO Raja Bal only joined the company this year, and received a grant of 45,000 restricted stock units in January -- which are not yet vested. He had no transactions to speak of. Other C-suite execs, such as Chief Administration Officer Ho Il Kim and COO Dan Squiller, had similar Rule 10b5-1 trading plans in place, also selling shares in early September.

Since these plans were likely set up well in advance, probably before GT knew how bad things had gotten, it doesn't appear that any laws were broken. What's more feasible is that management knew the risks involved with the Apple deal, knew public speculation was driving massive share gains, and wanted to take the opportunity to diversify their personal finances.

It's highly unlikely that management knew that far in advance that the writing was on the wall; but they knew it was possible that the Apple deal could go sideways.