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Corning at Bargain Basement Prices

Post Time:Dec 23,2008Classify:Company NewsView:437

Corning Incorporated (NYSE: GLW) shares rose sharply in pre-market trading after CNBC’s Jim Cramer recommended the stock on his Mad Money Lightning Round. The hedge fund manager turned television star believes that the communications equipment maker is extremely undervalued and represents a great opportunity to buy at the bottom. However, Cramer cautioned that lower and lower expectations may continue to drive the price down in the near-term.

Last quarter, Corning missed analyst estimates and reported sharply lower earnings on slowing television demand. Profit for the quarter came in at $0.20 per share on revenues of $1.3 billion compared to analyst expectations of $0.42 per share on revenues of $1.55 billion in sales. The firm attributed the decline in tighter consumer spending, especially on discretionary items like high-end televisions. Since more than 90 percent of the firm’s profits come from glass for TVs, that’s bad news.

Slower top-line sales may be dragging on results, but Corning is making efforts to keep its bottom-line intact. The current retail weakness, combined with an inventory correction, has resulted in a substantial mismatch between the firm’s capacity and demand from consumers. As a result, the firm announced earlier this month that it was considering permanent plant closing and steep job cuts to cut costs and help improve its net profit figures.

These cuts are expected to result in 2009 capital spending of $1.1 billion, which includes about $450 million related to construction completed in 2008. However, even with these cuts, Corning withdrew its 2009 forecast that many are now expecting to drop sharply. Luckily, shareholders can still count on the firm’s fiber optics division to produce profits to help offset weakness in its larger glass division. The cable division works in partnership with Verizon to expand its footprint in the U.S.

Corning Incorporated (Corning) is a global, technology-based company that operates in four business segments: Display Technologies, Telecommunications, Environmental Technologies and Life Sciences. Display Technologies segment manufactures glass substrates for use in liquid crystal flat panel displays. Telecommunications segment manufactures optical fiber and cable, and hardware and equipment components for the telecommunications industry.

Shares of Corning Incorporated rose $0.21, or 2.39%, to $9.00 in pre-market trading.

Source: InvestermsAuthor: shangyi

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