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Corning Sees Pressure On LCD Glass Pricing; Mulls Layoffs

Post Time:Dec 10,2008Classify:Company NewsView:335

Corning (GLW) on December 9 said the company is considering a new round of cost-cutting moves, including job cuts, in response to intense pressure on LCD glass pricing.

On an upbeat note, Corning said that preliminary estimates of LCD TV sales in the U.S. in November were actually ahead of last year. In a statement, CFO Jim Flaws said the company was “encouraged by this strong performance in the weak economic climate.” Flaws said that sales were below its original expectations, but that the company is “pleased to see the resiliency of this product with consumers,” and “gives us a measure of confidence there could be continued growth in this market next year.”

Flaws added that LCD TV sales in Japan in November were up 28% year over year, higher than expected. In Europe, preliminary data for October 29% growth, above expectations. In China, LCD TV unit sales were up 31% in the September and October period, slightly lower than expected.

But Flaws said the supply chain is still correcting for excess inventory, with panel makers running at very low utilization rates. He says the company is “feeling increased pressure for pricing relief from our customers,” and that due to the end market weakness and the inventory correction there is “a substantial mismatch between glass capacity and demand by our customers.” The result is that the company in Q1 2009 “expects to reduce glass prices at a higher rate than in recent history.”

Flaws says the company is also moving rapidly to re-size its current operations. “In addition to previously announced actions to reduce capacity in the LCD business and to reduce capital spending, potential actions include permanent manufacturing capacity consolidation, reducing operating expenses to be flat or lower than 2008, and workforce reductions,” Flaws said. Corning will announce any decisions on these potential actions when it announces Q4 results in January.

GLW is down 10 cents, or 1.1%, to $8.89.

Source: blogs.barrons.comAuthor: shangyi

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