DOW JONES NEWSWIRES
Corning Inc.'s (GLW) fourth-quarter net income plunged 65% as
demand dropped, with the company announcing the planned cut of
3,500 jobs, or 13%, of the work force, this year.
Shares fell 5.5% premarket to $9.40 as the company warned it
expects to barely break even in the first quarter; analysts
surveyed by Thomson Reuters projected earnings of 19 cents a
share.
"We experienced a significant momentum shift in many of our core
businesses in the fourth quarter as the recession took hold,"
Chairman and Chief Executive Wendell P. Weeks said of the job cuts,
which the company had hinted at in December. The layoffs will cut
costs some $200 million a year.
The maker of liquid-crystal-display glass and fiber-optic
equipment posted net income of $249 million, or 16 cents a share,
down from $717 million, or 45 cents a share, a year earlier.
Excluding items including one-time gains, earnings fell to 13 cents
a share from 40 cents.
Net sales slumped 32% to $1.08 billion.
In November, the company warned it wouldn't meet its
fourth-quarter view amid falling demand for LCD glass. The latest
estimates of analysts surveyed by Thomson Reuters was for earnings
of 20 cents a share on revenue of $1.16 billion.
Gross margin slumped to 28.3% from 47.9%, reflecting lower
volume in all segments and the cost of capacity reductions.
Revenue in the display-technologies segment was down 50% as
customers reduced their inventories amid lower retail sales of LCD
products. Sales in the telecommunications segment, which includes
fiber-optic cable, decreased 18%. Sales at its smaller
environmental technologies business dropped 28%, reflecting the
decline in the auto sector.
Looking ahead, the company expects a 20% to 25% drop in combined
display volume as customers continue to cut inventory and
high-single-digit price declines on a percentage basis. However,
retail sales of LCD TVs in December were stronger than expected,
and Corning expects the trend to continue this month. The company
also estimates that customers' inventories have been cut close to
late 2007 levels, boding well for an increase in demand during the
second quarter.
Corning has invested heavily in developing new business lines,
but the economic downturn has diminished demand for its fiber-optic
cable, used in telecom networks, as well as emissions-control
devices for cars and trucks, leading the company to cut
production.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com
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