Corning Incorporated (NYSE: GLW) Senior Vice President and
Corporate Controller Tony Tripeny will update investors at the
Credit Suisse Annual Technology Conference in Scottsdale, Ariz.,
today (1:30 p.m. ET) on the company’s 2011 fourth-quarter
performance, including its Display Technologies segment and views
on the overall LCD glass market.
“We have updates to provide since our third-quarter conference
call, including final LCD TV retail data for the month of
September,” Tripeny will say. In September, worldwide LCD TV unit
sales grew 12%, including 13% in the U.S., 7% in Europe, 22% in
China, and 67% in South America. As expected, LCD television unit
sales in Japan fell more than 50%, following the digital conversion
that concluded in July. “The growth rates in all of these regions
were in line with our expectations,” he will add.
Tripeny will also note that in the U.S., October retail sales of
LCD TV units increased 4%, in line with Corning’s expectations. “We
are even more pleased with year-over-year growth in terms of area
versus units. Forty-inch and larger LCD TVs have remained the
fastest-growing size category, resulting in area growth rates that
are higher than unit growth.” Tripeny will explain.
Corning will also comment that it expects the display glass
supply chain to exit the year at historically lean levels compared
to past years.
Corning will also provide an update on its fourth-quarter
guidance. “We disclosed in our third-quarter earnings call that we
expected to regain lost market share in Korea in the fourth
quarter. We significantly reduced LCD glass pricing during the
quarter to compress our pricing premium, in light of the current
state of glass over-supply in the industry. We believed these
actions would result in the return of share at a major customer in
Korea, in line with the terms stated in our long-term supply
contract with them. However, following initial positive reactions,
including higher shipments in October and early November, this
customer recently informed us that they do not expect to honor the
contract for the remainder of the quarter. As a result, Samsung
Corning Precision Materials Co., Ltd. is not expected to reach its
volume targets in Korea,” Tripeny will say.
He will also add that Corning expects SCP’s LCD glass volume to
be up 5% to 10% sequentially versus original guidance of more than
20% volume growth. The company’s combined LCD glass volume, which
includes both its wholly owned business and SCP, is now expected to
be up slightly sequentially versus previous guidance of up more
than 10%. Additionally, he will explain that LCD glass price
declines are expected to be more significant in the fourth quarter.
As a result, consolidated equity earnings are expected to be down
30% versus original guidance of down 5%.
Corning also will announce that it is taking action in the
fourth quarter to reduce its glass capacity. "While we expect
worldwide glass demand to increase sequentially this quarter, we
still believe there will be excess glass capacity. As a result, it
is prudent for us to reduce capacity at both our wholly owned
business and SCP. At our wholly owned business these actions will
include delaying the start up of new glass melting tanks, as well
as postponing the relighting of tanks that are down for repair.
There will be no special charges in the fourth quarter as a result
of these actions," Tripeny will explain.
Samsung Corning Precision plans similar actions to reduce
capacity, as well as shutting down several glass melting tanks. The
latter will likely result in one-time charges at SCP, primarily
related to accelerated depreciation. Corning’s share of these
charges is estimated to be in the range of $25 million to $50
million in the fourth quarter.
The combined actions at both Corning's wholly owned business and
SCP will reduce the company's total worldwide capacity by
approximately 25% by the end of the fourth quarter.
“We have made these decisions to adjust our glass capacity in an
effort to match market demand. These actions have also taken into
account our capacity needs for Corning® Gorilla® Glass demand,”
Tripeny will add.
The company will also be lowering its Gorilla Glass sales
forecast for the fourth quarter to a 25% sequential decline,
compared to its original forecast of a 15% sequential decline. The
revision is due to lower worldwide demand for cover glass for
tablet computers. The company will have no other changes to its
fourth-quarter forecast.
“While we are clearly facing some headwinds this quarter, we are
not changing our long-term growth expectations for the company,”
Tripeny will tell investors. “Our goal to grow company sales to $10
billion is still well on track with all of our segments growing. We
were quite pleased to report recently higher expectations for our
Environmental Technologies segment sales over the next few years,
and it is likely we will also increase our Telecommunications
segment sales forecast, in light of the recent sales contract
announced with the National Broadband Network of Australia.”
“Recently, we announced a 50% increase in our quarterly dividend
and a $1.5 billion share repurchase program. On the latter, our
intent is to repurchase our stock relatively quickly. We believe
the long-term value of our businesses is significantly higher than
our current stock price,” he will note. “Looking ahead, given our
lower capital spending expectations for 2012 and 2013, we
anticipate generating significant cash flow over the next few
years. This will enhance our financial flexibility to invest in our
future.”
Corning's comments to investors at the Credit Suisse Annual
Technology Conference will be available from Corning's investor
events web page.
Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements” (within
the meaning of the Private Securities Litigation Reform Act of
1995), which are based on current expectations and assumptions
about Corning’s financial results and business operations, that
involve substantial risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business
conditions; conditions in the financial and credit
markets; currency fluctuations; tax rates; product demand
and industry capacity; competition; reliance on a concentrated
customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in
the mix of sales between premium and non-premium products; new
plant start-up or restructuring costs; possible
disruption in commercial activities due to terrorist activity,
armed conflict, political or financial instability, natural
disasters, adverse weather conditions, or major health concerns;
adequacy of insurance; equity company activities; acquisition and
divestiture activities; the level of excess or obsolete inventory;
the rate of technology change; the ability to enforce patents;
product and components performance issues; retention of key
personnel; stock price fluctuations; and adverse litigation or
regulatory developments. These and other risk factors
are detailed in Corning’s filings with the Securities and
Exchange Commission. Forward-looking statements speak only as of
the day that they are made, and Corning undertakes no obligation to
update them in light of new information or future events.
About Corning Incorporated
Corning Incorporated (www.corning.com) is the world leader in
specialty glass and ceramics. Drawing on 160 years of materials
science and process engineering knowledge, Corning creates and
makes keystone components that enable high-technology systems for
consumer electronics, mobile emissions control, telecommunications
and life sciences. Our products include glass substrates for LCD
televisions, computer monitors and laptops; ceramic substrates and
filters for mobile emission control systems; optical fiber, cable,
hardware & equipment for telecommunications networks; optical
biosensors for drug discovery; and other advanced optics and
specialty glass solutions for a number of industries including
semiconductor, aerospace, defense, astronomy and metrology.
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