--CEO warns of headwinds in Europe, China
--LCD glass price declines moderate in 2Q
--Stronger LCD glass volume expected in 3Q
Corning Inc.'s (GLW) second-quarter profit dropped 39% as
still-weak consumer demand hurt prices for its television-screen
glass.
At the same time, the company predicted third-quarter glass
volume would grow sequentially in the low double digits, driven by
continuing demand for tablet computers and larger TV sizes.
Glass-price declines will "remain moderate" in the current quarter,
the company said.
Corning, which relies on sales of LCD TV glass for the vast bulk
of its profits, warned earlier this year that price declines would
persist, though it predicted the declines would moderate in the
second quarter. Its exposure to the consumer-electronics market has
pushed down profits for the past three quarters as the depressed TV
market has kept a lid on component prices.
Chairman and Chief Executive Wendell Weeks said LCD-glass price
declines moderated compared with earlier quarters, though weakening
economic conditions in Europe and China created another cause for
concern.
"We are alert to the fact that the economic woes may grow, and
consumers may reduce their spending, which could impact our
customers," Mr. Weeks said. "If we see further weakness, we will
respond with appropriate actions."
The company delivered slightly more optimistic commentary about
retail demand in the U.S., where sales of larger screens are
helping pad revenue.
"Television sales have been positive in the U.S. every month so
far this year, but we're not seeing any sentiment change so far,"
Chief Financial Officer Jim Flaws told Dow Jones Newswires.
The company earlier this year moved to diversify its revenue
stream by paying about $730 million in cash to acquire the bulk of
Becton Dickinson & Co.'s (BDX) lab-products business, snapping
up a portfolio it said would significantly increase its presence in
the life-sciences market.
Corning reported a profit of $462 million, or 30 cents a share,
down from $755 million, or 47 cents a share, a year earlier.
Excluding charges tied to absestos liability, per-share earnings
fell to 31 cents from 48 cents as revenue slid 4.8% to $1.91
billion.
Analysts polled by Thomson Reuters were expecting a profit of 31
cents per share and $2.02 billion of sales.
Gross margin narrowed to 41.8% from 44.3%.
Earnings fell 42% in the display-technologies segment, which
contains the LCD TV glass operations, as sales declined 16%. The
smaller telecom, environmental-technologies and specialty-materials
units all posted higher profits.
Corning shares slid 1% to $11.94. The stock has declined 16%
over the past three months.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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