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Corning Expects to Curtail Operations in '09

Post Time:Dec 11,2008Classify:Company NewsView:359

CORNING, N.Y. -- Glass and ceramics company Corning is expected to report Tuesday that it plans to scale back operations in 2009 as most of its business segments struggle amid the ongoing economic slump.

In addition to previously announced plans to reduce capacity in the LCD-TV business and to reduce capital spending, Corning is considering consolidating manufacturing capacity and reducing operating expenses to be flat or lower than 2008 levels, as well as possible job cuts. Corning will provide an update on its decisions in January when it releases fourth-quarter results.

Corning expects to reduce 2009 capital spending to $1.1 billion, of which about $450 million stems from construction completed in 2008.

Speaking at a technology conference sponsored by Barclays, James B. Flaws, vice chairman and chief financial officer, is also expected to report that retail sales of LCD televisions in the U.S. for November were ahead of last year.

Additionally, some of the more recent monthly sales data from outside the U.S. was stronger than expected. In Japan, sales of liquid-crystal-display TV units rose 28% year-over-year in November. In Europe, preliminary estimates for October suggest sales increased 29% year-over-year, the company said.

"The demand level is lower than we had forecast earlier this year, but if this level continues, it should help correct the supply chain imbalance," Flaws said in a statement provided by the company ahead of the presentation. "We believe we could see increasing demand starting in the second quarter of 2009."

However, despite the recent strength of retail sales, the company is still correcting for excess inventory, and expects to reduce glass prices at a higher rate than in recent years during the first quarter.

Corning shares were up fractionally to $9.03 in recent trading.

Source: TheStreet.comAuthor: shangyi

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