GLW Corning Inc

Corning Inc. (GLW) reported its fourth-quarter profit slumped 53% and said it plans to cut capacity in its liquid-crystal-display glass business, as weak demand is leading to "significant" price declines.

Lackluster television demand has created a massive headwind for electronics retailers, set manufacturers and suppliers like Corning, the world's largest maker of LCD glass for TVs. Struggling panel makers with excess supply have been able to negotiate for steep price declines. Corning is hoping it can restore balance by cutting output, but the company acknowledged the environment has hurt its performance.

"These price declines are a reality, and they've lowered the profitability of our key businesses," Corning Chief Financial Officer Jim Flaws said in an interview. "We have ways to stop the price declines, and it remains to be seen if those will work."

Shares fell 9% to $13.30 Wednesday morning.

Flaws said price declines will be significant in the first quarter, and the company isn't expecting much change in the overall glass market until after the period.

Equity earnings in the first quarter are expected to decline 5% to 20%, excluding special items, due to lower earnings at its ventures with Samsung Electronics Co. (SSNHY, 005930.SE) and Dow Chemical Co. (DOW).

Corning's capacity plan follows a disappointing year for the TV industry. Consumers were cool on higher-priced sets with added features and sales were driven instead by heavy discounting. In November, Corning slashed its fourth-quarter profit estimate and said a major panel maker backed out of part of a sales contract, the first time that had happened in its LCD business.

Flaws said the company's display business, which accounts for more than a third of Corning's revenue and the vast bulk of its earnings, remains "very profitable." He argued Corning's other businesses -- such as making fiber-optic cables and the scratch-resistant Gorilla Glass used in smartphone and tablet screens -- are also growing quickly. Corning's full-year sales and gross margins were the company's highest ever.

Corning posted a profit of $491 million, or 31 cents a share, compared with $1.04 billion, or 66 cents a share, a year earlier. The year-earlier period included a $326 million credit. Excluding items such as restructuring and other impairments, per-share earnings fell to 33 cents from 46 cents.

Revenue increased 6.9% to $1.89 billion. Analysts surveyed by Thomson Reuters expected earnings of 33 cents a share on revenue of $1.85 billion.

Gross margin widened to 43.7% from 43.5%.

Display technology sales jumped about 4% to $780 million.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

--Mia Lamar and Lauren Pollock contributed to this report.

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