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2nd UPDATE: Corning 3Q Net Rises On Higher Display Glass Sales

Post Time:Oct 27,2011Classify:Company NewsView:373

Corning Inc.'s (GLW) third-quarter earnings rose 3.3% as its sales of liquid-crystal-display glass surged, but the company gave a mixed outlook for the rest of the year.


The world's biggest supplier of glass for LCD screens indicated it faces increased price pressure this quarter as its customers, struggling television panel makers, cut inventories in anticipation of sluggish demand. But the company also said its display glass business will see a 10% sequential increase in volume, helped by share gains at its joint venture with Samsung Electronics Co. (SSNHY, 005930.SE).


The Corning, N.Y.-based company gave the guidance after reporting third-quarter results that topped analysts' expectations. Shares were up 2.4% at $14.07 in mid-afternoon trading, off the day's high of $14.94.


"It was a cautious outlook, but I think expectations were pretty low considering the macro environment," Brigantine Advisors LLC analyst Darice Liu said.


Corning's reported third-quarter display glass volume at its wholly owned operations rose sequentially by a "mid-single digits" percentage, topping its September prediction that it would be flat. Volume at the Samsung venture declined 20%, versus last month's forecast of a 30% plunge.


The company contends that television demand remains strong, expecting television unit sales to climb 13% this year. But the environment has been difficult for panel makers such as AU Optronics Corp. (AUO) and LG Electronics Inc. (0066570.SE), which both reported losses this week.


Display glass accounts for the majority of Corning's sales and the vast bulk of its profits. Meanwhile, all its other business segments, which make products such as fiber-optic cables and scratch-resistant screens for smartphones, saw growth during the quarter.


"We had strength in all of our businesses," Chief Executive Jim Flaws said in an interview. Flaws said foreign exchange benefits and a reduction in bonus compensation accruals helped the results top analyst estimates.


In the display business, "we had a rebound in Japan because our customers there had taken some shutdowns in [the second quarter]," Flaws said in an interview. "We had good volume in Taiwan and China, and sales were also helped by the exchange rate."


Corning faces continued inventory reductions. Flaws said the level of inventory in the supply chain may fall to about 13 weeks' worth in coming months, down from 14 weeks now and 17 weeks in July.


The company lowered its full-year projection for worldwide glass sales to 3.2 billion square feet, from its July forecast for 3.3 billion and 3.4 billion.


Corning posted a profit of $811 million, or 51 cents a share, up from $785 million, or 50 cents a share, a year earlier. Excluding items like provision for income taxes and contingent liability, per-share earnings fell to 48 cents from 51 cents. Revenue increased 30% to $2.08 billion.


Analysts surveyed by Thomson Reuters expected earnings of 41 cents a share on revenue of $2.02 billion.


Gross margin rose to 47.1% from 45.2%.


Display technology sales, the company's biggest revenue driver, jumped 26% and were up 21% excluding the impact of a stronger yen.


Telecommunication segment sales rose 21%, while specialty materials sales nearly doubled. The specialty segment includes Gorilla Glass, a fast-growing product used in handheld devices, tablets and laptop computers.


Flaws said the company is "cautious" about Gorilla Glass expectations in the fourth quarter, though he expects the product's volume will triple this year.


"It's a question of, for consumers around the world, how many of these devices are they going to buy?" he said.


Source: http://online.wsj.comAuthor: shangyi

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