UPDATE: Corning 2Q Net Down 17%, Signals Weakness In TV Glass
27 Luglio 2011 - 3:15PM
Dow Jones News
Corning Inc.'s (GLW) second-quarter earnings fell 17% as the
liquid-crystal display glass maker suffered from expected weakness
in television sales.
Corning, which relies on sales of LCD TV glass for the vast bulk
of its profits, cut its full-year forecast for world-wide glass
sales to 3.3 billion and 3.4 billion square feet from its earlier
view of 3.5 billion to 3.7 billion. The company expects its display
segment to continue to see modest declines in volume and glass
prices in the third quarter.
"It is very clear that consumers are not rushing to buy
televisions at the rate people were hoping for," Corning Chief
Financial Officer Jim Flaws said in an interview.
But Flaws noted that "assuming [demand] doesn't go down in
display but it's just more flattish, we have great growth prospects
in the rest of the company."
Corning shares fell 4.3% to $16.55 in recent premarket
trading.
Weak consumer demand has led TV panel makers as LG Display Co.
(034220.SE) to pare production plans of late. 3M Co. (MMM) said
Tuesday that it expects its business providing films that enhance
the brightness of LCD screens to remain weak in the second half of
the year.
The display technologies segment, which contains the LCD TV
glass operations, saw earnings plunge 17% on a 9% drop in volume
and "moderate" price declines. But bottom lines improved at the
telecom, environmental technologies and specialty materials
units.
Overall, Corning reported a profit of $755 million, or 47 cents
a share, down from $913 million, or 58 cents, a year earlier.
Adjusted earnings were 48 cents a share, a penny above the average
analyst estimate on Thomson Reuters.
Revenue jumped 17% to $2 billion, also beating the Thomson
Reuters estimate of $1.96 billion.
Gross margin narrowed to 44.3% from 48.3%. Overhead expenses
grew 15% as research, development and engineering expenses
increased 19%.
Corning cut its current-year forecast for sales of Gorilla
Glass, which it has touted as a growth driver, to $800 million from
its previous view of $1 billion because Sony Corp. (SNE, 6758.TO)
didn't use it on as many televisions as the company had
expected.
Sony uses the scratch-resistant glass--also used as the screen
on tablets and smartphones--on Bravia televisions, a higher-end
line that tends to have relatively low volume.
Corning still expects sales of Gorilla Glass to triple this year
on sales to smartphone and tablet makers.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com
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