GLW Corning Inc

Corning Inc. (GLW), which posted a 17% drop in second-quarter earnings Wednesday, signaled it will continue to suffer from weak demand for glass used in liquid-crystal display television panels.

The world's biggest supplier of glass for LCD screens said it expects its display segment to continue to see modest declines in volume and glass prices in the third quarter, a shift in tone from April, when it had said it expected a "significant increase" in LCD glass demand in the period. The comments sent shares down 6.3% to $16.21 in late morning trading, after touching a 10-month intraday low.

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.

Brian White, an analyst with Ticonderoga Securities LLC, said the third-quarter outlook was "much weaker than we had modeled" and "plays into a bigger trend that's happening that the company doesn't seem sensitive to: The LCD TV market is significantly slowing."

Weak consumer demand has led TV panel makers such as LG Display Co. (034220.SE) to pare production plans of late. AU Optronics Corp. (AUO) said Wednesday it will cut capital spending 30% from its previous forecast and won't add new production capacity next year as it reported it swung to a second-quarter loss on sluggish TV demand.

"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."

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 analysts' 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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