Japanese glass maker shares hit by Corning warning

Shares of Nippon Electric Glass and Asahi Glass Co tumbled on Thursday after rival Corning Inc cut its outlook on slower-than-expected demand for glass used in flat TVs.

Corning´s profit warning came on the same day that flat panel maker LG Display Co Ltd said it would keep its output at 90 percent of normal as prices remain weak and demand slow for flat screen TVs and PCs.

Asahi Glass closed the morning down 3.6 percent at 1,065 yen, underperforming a 0.4 percent fall in the benchmark Nikkei average .N225. Nippon Electric was hit harder, going untraded due to a glut of sell orders at 1,225 yen, down 14 percent.

"Compared with Asahi Glass, Nippon Electric Glass has bigger exposure to panel makers that are undergoing a correction in production, such as AU Optronics Corp and LG Display," said Nomura Securities analyst Takaomi Kono.

Corning said that while the consumer market for liquid crystal display (LCD) TVs was still strong, shipments of its LCD glass were slower than expected as manufacturers were taking more time to work through their excess inventory.

"We had a strong April-June quarter, when demand for LCD glass was robust, and we were not able to catch up with demand," said Shigeru Harada, manager of public relations at Nippon Electric Glass.

"But for the July-September quarter, we are expecting an impact from the ongoing production correction by panel makers in South Korea and Taiwan," he said.

Nippon Electric is scheduled to update its estimate for the July-September quarter and give a forecast for the following quarter in the final week of this month.

Nomura´s Kono said he expects Nippon Electric to keep its forecast for group operating profit to come in a range of 100-130 billion yen ($924 million-$1.20 billion) for the year ending in March 2009.

"Even considering the current situation, I expect the company can meet its target range given the very strong first quarter," Kono said.