GLW Corning Inc

Corning Inc. (GLW) expects telecommunications spending to see little pickup in 2010, underscoring the continued reluctance by the carriers to make big capital bets amid the slow economic recovery.

"The resumption in spending may come some time after the recession," Corning Chief Financial Officer James Flaws said during the company's investor meeting on Friday.

While the telcos are seeing growth in the wireless business, high levels of unemployment and weak business spending continue to hamper their wireline businesses, in which Corning operates. Verizon Communications Inc. (VZ) Chief Executive Ivan Seidenberg, for example, said he didn't expect the economic recovery to help the company as much as he had hoped.

Once Corning's primary revenue driver, the telco equipment segment has since been overshadowed by the booming business for glass for liquid crystal display televisions. In the fourth quarter, Corning's display business grew 86% to $717 million, while telecommunications revenue remained flat at $405 million.

Corning is seen as an indicator of telecom spending health. The company manufactures fiber-optic cables, necessary to create a speedier ground network. Verizon, for instance, is one of its largest customers, using the company's equipment to upgrade its copper lines to fiber-optic ones. Verizon looks at its fiber-optic network, dubbed FiOS, as one of its key growth drivers.

Corning, however, expects additional market declines in 2010, although less than 2009, said Marty Curran, who runs the optical-fiber business for Corning. He said spending by Verizon declined as the company nears the end of its build-out.

Still, Flaws held out hope of an eventual recovery.

"I continue to like the long-term potential of the business," he said.

Overall, Corning expects sales and earnings to grow this year over 2009. Flaws said he expects earnings to grow faster than revenue, helped by further cost cuts and higher margin products in the display and environmental segments.

The company remains bullish on the demands for LCD television displays, as well as with the environmental business, which include filters and other equipment for vehicles.

Corning expects LCD television sales growth to return to a normal rate of 4% this year. Additional growth should come from China, which is enjoying explosive demand for high-definition televisions.

Corning expects to spend $600 million to $700 million in capital expenditures, with a majority spent on display technologies. Flaws said capex could increase by as much as $300 million to invest in "adjacent opportunities" and to buy precious metals as hedge against potential shortages.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

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