Corning lowers 4Q profit outlook

ROCHESTER, N.Y. (AP) — Shares of Corning Inc. tumbled 7 percent Tuesday after the specialty glass maker lowered its fourth-quarter sales and profit guidance to reflect slumping demand for glass used in flat-screen televisions and computers.

Profit in the October-December period will be at the low end or below a previous projection of 20 cents to 28 cents a share, the company said. Sales are expected to fall below previous guidance of $1.1 billion to $1.2 billion.

The world's largest maker of liquid-crystal-display glass also said it was withdrawing previously disclosed guidance for 2009.

On average, analysts surveyed by Thomson Reuters expected earnings of 25 cents a share and sales of $1.32 billion in the fourth quarter. They projected a $1.24 profit on sales of $5.66 billion next year.

As the global economy worsens, consumers are reining in purchases of LCD-TVs, especially larger-screen models, and industry analysts expect the drop in sales will be more severe in 2009.

DisplaySearch, a market research firm based in Austin, Texas, expects to pare back its prediction of 30.2 million LCD-TV shipments in North America this year by just "a million or 2 million units," analyst Paul Gagnon said. "Most of the impact won't be felt until next year.

"Currently we're projecting about 130 million shipments worldwide" in 2009, up from around 102 million in 2008, Gagnon said. "That might come down, in the best case scenarios, by maybe 10 million units. But it could get worse, especially if the recovery takes a lot longer to materialize."

Corning, a 157-year-old company based in western New York, commands more than 50 percent of the global market for its high-profit LCD glass.

"Their relatively low-competition position atop the supply chain makes them better off than other players," Gagnon said. "The panel makers are really feeling the brunt of it."

After plunging as much as 18 percent to a five-year low, Corning's stock rallied in afternoon trading to finish at $8.39, down 64 cents, on the New York Stock Exchange.

When it posted third-quarter results on Oct. 29, Corning warned that slowing demand for LCD glass, its biggest business, would sharply curtail sales and income in the fourth quarter. It also cautioned that the slowdown will likely extend into 2009 and said it planned to idle some glassmaking operations and trim jobs in Taiwan and possibly Japan. About half of the company's 27,000 employees are U.S.-based.

"The retail environment and the LCD supply chain are both extremely uncertain," Chief Financial Officer Jim Flaws said in a statement delivered Tuesday at a conference in New York.

"As a result, since the display business is a significant contributor to our overall results, we are unable to offer revised guidance for the fourth quarter or for 2009 at this time."

Corning plans to make further reductions in LCD glass manufacturing capacity in the fourth quarter, he said. That will impact gross margins in the display technologies segment and the company overall.

Corning will have restructuring charges in both the fourth quarter and in the first half of 2009 as it adjusts its capacity and fixed-cost structure to reflect the lower demand, Flaws said.

Corning plans to update investors on the business environment at the Barclay's Technology Conference in San Francisco on Dec. 10.