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Less Glass equal to Fewer TVs equal to Lower Prices?

Post Time:Nov 24,2008Classify:Industry NewsView:423

While the world’s TV manufacturers continue to promote a rosy sales picture for the flat-panel TV industry, inside developments indicate something different.

The latest sign of trouble in the industry comes from Corning Incorporated. If you think the company just makes cookware, you’re missing the bigger picture. (In fact the company is out of the cookware business; it licensed the CorningWare product line to World Kitchen in the late 1990s)

Corning is actually the world’s largest supplier of glass for LCD televisions; according to Paul Semenza, a senior vice president at DisplaySearch, Corning supplies more than half of the glass used for LCDs.

Two days ago, the company announced that it was withdrawing its previous fourth-quarter sales guidance which it had just made last month, due to slumping demand.

According to James B. Flaws, Corning’s vice chairman and chief financial officer, “We now expect our fourth-quarter sales to be below our guidance range of $1.2 billion to $1.3 billion, and earnings per share to be at the low end or below our guidance range of $0.20 to $0.28. The retail environment and the LCD supply chain are both extremely uncertain. 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.”

In plain English, TV manufacturers are cutting back on production, and hence requiring fewer glass panels. Corning supplies many of the second-tier Taiwanese manufacturers, such as AU Optronics, which add additional capacity to companies like Sharp and Sony when their own facilities can’t keep up.

Production is slowing because retailers are ordering fewer sets because customers have cut back on purchases. All of which could put retailers under added pressure to cut prices further to move the TVs they already have in stock for this holiday season.

Source: Corning IncorporatedAuthor: shangyi

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