Corning 3Q profit falls but still beats Wall Street forecast as TV glass deamnd grows

By Ben Dobbin, AP
Monday, October 26, 2009

Corning 3Q profit off, but TV glass demand grows

ROCHESTER, N.Y. — Corning Inc. said Monday that demand is rebounding for its flat-screen television glass but the specialty glass maker’s third-quarter profit fell from a year ago as overall sales slipped.

Both Corning’s profit per share and revenue beat Wall Street expectations, however.

Retail sales of liquid-crystal-display TVs remained strong worldwide in the third quarter and “this helped pull a significant amount of product through the supply chain,” Corning’s chief financial officer, James Flaws, said in a conference call with analysts.

“We anticipate the strong retail environment to continue in the fourth quarter” along with a gradual slide in glass prices, Flaws said. “We do not view gradual panel price declines … as a negative.”

Its shares rose 23 cents, or 1.5 percent, to $15.88 in morning trading.

The world’s biggest maker of LCD glass for TVs and laptops said it earned $643 million, or 41 cents a share, in the July-September period, down from $768 million, or 49 cents a share, a year earlier.

Excluding unusual items, its profit of 42 cents a share beat Wall Street’s forecast of 39 cents a share.

Sales fell 5 percent to $1.48 billion from $1.55 billion a year ago. That also beat analysts’ forecasts of $1.42 billion.

Sales in Corning’s display technologies segment fell 2.4 percent to $679 million from $696 million a year earlier after an earthquake in August cut production at its LCD plant in Shizuoka, Japan. But sales edged up 0.9 percent from $673 million in the second quarter.

As the recession deepened a year ago, jittery panel makers slashed glass purchases to reduce a buildup in inventories as prices dropped sharply. Corning eliminated 3,500 jobs in January, but retail sales of LCD-TVs held steady and demand for its ultra-thin glass has been rebounding since February.

Glass volume was 4 percent higher than in the resurgent second quarter and is expected to remain flat or fall slightly in the fourth quarter.

DisplaySearch, a market-research firm based in Austin, Texas, estimates that about 130 million LCD-TVs will be shipped worldwide this year, up from 105 million in 2008. In North America, shipments were expected to rise to 34 million from 30.1 million last year.

“Unit velocity is actually doing quite well right now,” said analyst Paul Gagnon. “But it’s for smaller screen sizes mostly, not so much growth on the 40-inch-plus part of the market. It’s partly due to the recession, consumers are looking for more affordable sets.”

LCD glass is Corning’s biggest business by far. It also makes ceramic auto-pollution filters and is the world’s largest maker of optical fiber and cable. Based in the city of Corning in western New York, it employs about 26,000 people.

Sales in its telecommunications unit fell 9 percent to $450 million from $496 million, with weakened optical-fiber sales for private networks in North America more than offsetting strong demand in China.

Environmental technologies sales fell 5.6 to $167 million from $177 million, hurt by weaker auto-pollution filter sales.

Corning said life-sciences sales, which rose 11 percent to $92 million, will surge more than 25 percent in the fourth quarter as it shifts beyond a heavy focus on display glass. It bought Axygen BioScience Inc., maker of plastic labware and liquid handling products for research labs, for about $400 million in September.

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