UPDATE: Corning 1Q Net Down 38% But LCD Glass Seen Returning To Growth
25 Abril 2012 - 10:27AM
Dow Jones News
Corning Inc.'s (GLW) first-quarter profit fell 38% as sharply
lower prices for its liquid-crystal-display glass continued to
weaken results, but the company said sales of that key product
would return to growth this year.
Shares jumped 5.6% premarket to $14.10 as Corning, the world's
largest maker of LCD glass for televisions, said LCD-glass price
declines should be "much more moderate" in the current quarter and
volume should build later this year on normal seasonality.
The company also predicted continued strong sales growth in its
smaller telecommunications and specialty-materials segments, which
make optical fiber and glass for handheld devices,
respectively.
Corning's bottom line is heavily reliant on LCD glass. The
display-technologies segment that houses that operation represents
about a third of total sales but 89% of net income in the latest
period. The segment has suffered as dim television demand spurred
flat-panel makers with excess supply to negotiate steep price
declines. That forced Corning to make significant LCD-glass
capacity cuts it hoped would restore the balance, but it expected
prices to remain depressed in the latest period.
Chairman and Chief Executive Wendell P. Weeks said Wednesday
that LCD-glass volume was slightly better than the company forecast
in the latest period. Display technology revenue declined 11% to
$705 million on the price declines.
Overall, 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%.
Sales in the telecommunications segment were up about 7.2%. In
specialty materials, revenue rose 13% driven by its Gorilla Glass
for smartphones and tablets.
The environmental-technologies segment increased revenue 1.5%,
while the life-sciences segment's sales rose 7.6%. 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.
--By Joan E. Solsman and Ben Fox Rubin, Dow Jones Newswires;
212-416-2291; joan.solsman@dowjones.com
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