Corning Inc.'s (GLW) first-quarter profit fell 38% as sharply
lower prices for its liquid-crystal-display glass continued to
weaken results.
But shares were up 3.9% premarket at $13.87 as the company beat
earnings and revenue expectations and it signaled improving pricing
in LCD glass in the current quarter, as well as continued strength
in its telecommunications segment. Through Tuesday's close, the
stock is up 2.9% so far this year.
Corning, the world's largest maker of LCD glass for televisions,
was hurt last year by lackluster TV demand, which has forced down
prices for its display glass due to oversupply. The company
responded in the fourth quarter by cutting capacity, hoping to
restore some balance to pricing, but expected prices to remain
depressed in the latest period. The display business accounts for
more than a third of Corning's revenue and the vast bulk of its
earnings.
Sterne Agee said this week that though Corning was expected to
post significantly lower earnings in the first quarter, the company
should benefit in future periods as glass gross margins could
bottom in the second quarter and Corning continues to diversify
into non-display segments.
"After two successive quarters of significant LCD glass price
declines, we expect our price declines will be much more moderate
this quarter," Corning Chief Financial Officer James B. Flaws said
Wednesday.
As part of its diversification effort, Corning earlier this
month unveiled plans to pay about $730 million in cash to acquire
the bulk of Becton Dickinson & Co.'s (BDX) lab-products
business, snapping up a portfolio it said will significantly
increase its presence in the life-sciences market. The company also
sees increased demand in its telecommunications business.
Corning posted a profit of $462 million, or 30 cents a share,
down from $748 million, or 47 cents a share, a year earlier.
Revenue edged down 0.2% to $1.92 billion.
Analysts surveyed by Thomson Reuters expected earnings of 28
cents a share on revenue of $1.87 billion.
Gross margin fell to 42.4% from 45.4%.
Display technology sales, the company's largest revenue driver,
declined 11% to $705 million. Telecommunications sales were $508
million, up about 7%.
-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; ben.rubin@dowjones.com