Corning Inc. (GLW) executives painted a sobering picture for the year but expressed optimism about the company's ability to take advantage of the opportunities that have emerged from the economic downturn.

"It's really bad out there," Chairman and Chief Executive Wendell Weeks said during an investor conference on Friday. "We've been hit hard by slowing global economies."

The Corning, N.Y., company is feeling the squeeze as demand falters in all of its businesses. Its liquid crystal-display division, once its strongest business, performed the worst in the fourth quarter, with a 50% year-over-year sales decline. Its other large business, making fiber-optic cables for telecommunications companies, fell 6% from a year earlier. As a result, the company said it will cut 3,500 jobs, or 13% of its work force.

"Concerns remain in our view as the global economy is still challenged and consumers rein in their spending," said Mark Sue, an analyst for RBC Capital Markets. "Nonetheless, Corning is being more prudent this year than last year and adjusting its cost structure for difficult times ahead."

Like many other companies that find themselves hard hit by the economy, Corning has made a number of moves to cut costs. While the company is on the defensive, Weeks said acquisition opportunities remain. During these distressed times, valuations are down, he said. The company sits on $2.8 billion in cash and short-term investments.

For the display business, Weeks said he expects the current supply contraction of LCD glass displays used in TVs to end in the second quarter. Corning is taking a hit as its customers, the TV manufacturers, are cutting back on inventory to match the reduced demand for flat-screen TVs. It's unclear how the TV market will fare as consumers hold back on buying big-ticket discretionary items.

Corning expects decline in sales of both LCD TV and computer monitors. It's the first significant decline in TV sales since the energy crisis of 1975, said Jim Clappin, who runs the company's display business.

The LCD business is particularly important for Corning because the division has a disproportionately large impact on its stock performance.

Corning's telecom business has been shrinking for years. One bright spot has been Verizon Communications Inc.'s (VZ) investment in fiber-optic lines, which it has been using to offer faster Internet and video services. But Verizon, like most other telecoms, is reining in its spending this year, which is a blow to Corning.

Corning projects a 10% to 15% decline in the telecom market from a year ago.

"We're prepared to take additional action in the second half to protect the financial health if things don't get better," Peter Volanakis, president and chief operating officer of Corning, said. "We're gearing ourselves for a deep recession."

Still, the executive wasn't completely downbeat in his presentation. Given Corning's pipeline of new products, the company hopes to win new customers and gain market share against rivals in this downturn, he added.

In addition to the job cuts, Corning shut down factories toward the end of last year, with some still partly or fully down. The company also suspended merit increases on salaries and has some employees working short weeks.

The cuts and other restructuring moves will result in annualized savings of $150 million to $200 million, Volanakis said. Capital expenditure is expected to fall 42% this year.

"We're going to use the recession as an opportunity to improve costs and fix things that aren't working well," he said.

Chief Financial Officer James Flaws said the company's goal is to keep paying its dividend, but noted that it hasn't been active in buying back shares under its current stock repurchase program. He added Corning would consider cutting its quarterly dividend, currently at 5 cents a share, if things get worse.

Corning stock was recently up 5.5% at $11.58.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com