Home > News > Company News > Corning Profit Drops; Growth Projections Fall Short

Corning Profit Drops; Growth Projections Fall Short

Post Time:Jul 28,2009Classify:Company NewsView:358

July 27 (Bloomberg) -- Corning Inc., the world’s biggest maker of glass for flat-panel televisions, posted an 81 percent drop in profit and signaled demand isn’t recovering as fast as some analysts had predicted. The stock fell in New York trading.

Net income slid to $611 million, or 39 cents a share, from $3.21 billion, or $2.01, a year earlier, when the Corning, New York-based company had a $2.38 billion tax gain. Sales fell 18 percent to $1.4 billion, the company said today in a statement.

Corning predicted its third-quarter glass shipments will be unchanged or increase “slightly” from last quarter, suggesting slowing demand. Shipments last quarter jumped 66 percent as demand for flat-panel TVs rebounded. Prices won’t recover this quarter, the company projected.

“The general environment is conducive for more growth than what Corning predicted,” said Mark Sue, a New York-based analyst with RBC Capital Markets. “The company is being a bit conservative.”

Corning fell 50 cents, or 2.9 percent, to $16.50 at 4 p.m. in New York Stock Exchange composite trading. The stock has gained 73 percent this year.

Corning restored its liquid-crystal display TV glass plants to 75 percent capacity from less than 50 percent earlier in the year as demand recovered, Chief Financial Officer James Flaws said in an interview. The company said it will be “cautious” about the amount of capacity it is restarting for the fourth quarter and for early 2010 as the pace of economic recovery is “uncertain.”

China Stimulus

Retail demand for LCD TVs will probably grow at “double- digit” rates in the second half, the company said. Prices and gross margin, or what’s left of sales after production costs, will be little changed from last quarter, Corning said.

Demand for flat-panel TVs is recovering, helped by stimulus spending in China that pushed people to buy electronics in the worst economic slump in at least half a century. The country, trying to stimulate consumption, earmarked 20 billion yuan ($2.9 billion) of subsidies for residents in rural areas to buy electronics.

DisplaySearch, a researcher in Austin, Texas, raised its estimate for 2009 LCD TV sales by 15 percent last month to $76 billion, helped by demand in China. That is still a decline of 6 percent from last year, the first drop in the industry’s history.

“We must not forget we’re still in a recession,” Flaws said. “We still are uncertain about the overall macroeconomic environment.”

Profit, excluding some costs, was 39 cents a share, compared with 49 cents a year earlier. Analysts projected 32 cents on sales of $1.34 billion, according to the average estimate in a Bloomberg survey.

Source: bloombergAuthor: shangyi

Hot News