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Corning gears up for recovery: CFO

Post Time:May 22,2009Classify:Company NewsView:296

Corning Inc (GLW.N) Chief Financial Officer Jim Flaws, who has weathered six recessions, sees technology demand recovering this year and is gearing up to snap up some bargain acquisitions.

Flaws said the specialty glass maker could see better-than-expected demand for flat-screen televisions, and has already restarted some previously mothballed plants.

He told the Reuters Global Technology Summit in New York on Wednesday that the time may be right for Corning to buy small or medium-sized businesses, and the company is looking to hire to expand its six-member mergers and acquisitions team.

"We tend to be glass half full people. Generally recessions end and I've been through six," Flaws said. "Our belief is 2010, we are looking for growth in televisions...We actually think IT (spending) will pick up a little bit at the end of this year (and) IT will be stronger next year."

After starting the year bruised by a sharp decline in demand from its TV-making customers, the Corning, New York-based company in April said things were looking up, with consumers' desire for sleek TVs defying the gloomy economy.

Low prices for big screens, and the U.S. conversion to digital TV transmission, spurred sales, and Corning last month lifted its forecast for the total 2009 glass market to 2.1 billion square feet, compared with 2 billion last year.

Asked about the potential for further upside to that forecast, now that the industry has notched another month of sales, Flaws said: "Probably a slightly greater chance it would be higher than it would be lower."

"Clearly with the strength we've seen so far in televisions, if that continues it would drive it slightly higher," he said.

CONDITIONS IMPROVING

Corning had closed some of its glass-making operations and shed about 13 percent of its workforce to shrink costs and cope with reduced demand brought on by the global economic slowdown. Now it is relighting some glass tanks and bringing back some people it laid off as it increases production.

Flaws also said that Corning plans to take advantage of falling valuations to pursue companies that were previously too expensive but which are now available at attractive prices as the recession takes a toll.

"Right now, we have the money to do small acquisitions ... and we are actively looking," Flaws said. Corning is eyeing small and medium-sized companies in the telecommunications and life sciences sectors, he said.

Flaws said conditions have improved in both the display business and its business of providing glass for fiber optic cables. "The display industry is doing much better, particularly for us," he said.

Corning is the largest maker of glass for liquid crystal display, or LCD, screens. About 60 percent of that business comes from televisions.

"We have price pressure from our customers -- Samsung (005930.KS), Sharp (6753.T), LG (034220.KS)," Flaws said, He noted that the rate of price declines have begun to shrink in the second quarter and pegged them at about 1 percent to 2 percent in the third quarter.

Despite his optimism about TVs, demand for other products that use Corning's glass are still sagging, including corporate notebook computers and emission control devices for automotive engines.

"The one that's harder for us to predict is the transportation market. We make the filters for heavy duty trucks, and the U.S. freight business is down, and there is not much incentive for somebody to buy a new truck today," Flaws said.

Corning shares rose 32 cents, or 2.25 percent, to close at $14.55, after hitting a session high of $15.26.

Source: ReutersAuthor: shangyi

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