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Corning Inc. eyes long-time customer's next move

Post Time:Apr 16,2012Classify:Company NewsView:303

One of Corning Inc.'s oldest and most reliable customers, Japanese television maker Sharp Corp., is in trouble.

 

Weak liquid crystal television sales have left Sharp facing huge losses.

 

One of the ways it is coping with the downturn is to spin off much of the ownership of its largest and most advanced factory -- in Sakai City, Japan -- to new investors.

 

Corning Inc., the Twin Tiers' largest employer, has a vital interest in whether Sharp is successful. Corning provides all the glass for the Sakai City plant from a factory located next door.

 

Sharp has already agreed to sell a 46 percent stake in the Sakai City plant to Taiwan's Hon Hai Precision Industry for $822 million.

 

Reports surfaced last week that it is also seeking investments from Toppan Printing and Dai Nippon Printing.

 

By reducing its ownership in the factory, Sharp hopes to insulate itself from mounting losses in the LCD TV business. The company is forecasting a loss of $4.8 billion in the year ended March 31.

 

Another Corning Inc. customer, Sony Corp., has backed out of a tentative deal to increase its 7 percent investment in the Sharp factory at Sakai City. Sony itself is facing a record $6.4 billion loss for the year that ended March 31 -- its fourth straight year of losses.

 

How seriously all this distress in the Japanese LCD market will affect Corning Inc. remains unclear.

 

There are some who think that the new investments in the Sakai City facility will increase production there, leading to more demand for Corning's liquid crystal display glass.

 

Absent some unexpected revival in demand, however, that seems like wishful thinking.

 

There are even whispers that Sony -- the first to use Corning's Gorrilla Glass in its TVs -- may get out of the LCD business as part of a badly needed corporate restructuring.

 

Much of the demand for Corning's LCD glass comes from Taiwan and Korea, so the faltering of Japan's two major television makers should not be catastrophic for the Fortune 500 company.

 

Corning Inc. has one other factor in its favor. It has pushed hard to strengthen its non-LCD businesses, an effort that is ready to pay dividends if global economic conditions cooperate.

 

Telecommunications, environmental products -- and in the longer term, life sciences products -- are poised to make a bigger contribution in the years ahead.

 

Given the uncertainties of the LCD television market, those other business segments may be ready to pick up the slack at just the right time.

Source: www.stargazette.comAuthor: shangyi

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