Corning First-Quarter Profit Tops Analysts’ Estimates (Update3)

Date: 30 April 2009
By Kelly RiddellCorning Inc., the biggest maker of glass for flat-panel televisions, posted first-quarter profit that beat analysts’ estimates and doubled its unit-growth forecast for liquid-display TVs as demand began to rebound.

Profit excluding items such as restructuring charges totaled 10 cents a share on sales of $989 million, the Corning, New York-based company said today in a statement. Analysts on average estimated earnings of 5 cents on $979 million in revenue, according to a Bloomberg survey. The company had forecast a break-even quarter.

Orders started to pick up after an inventory glut and sluggish demand sent prices lower, Chief Financial Officer James Flaws said. Corning, which supplies glass for more than half of the world’s LCD TVs, now expects demand for its product to increase 18 percent this year, double its original forecast.

“We’ve seen good growth around the world, in particular in LCD televisions,” Flaws said in an interview. Some manufacturing operations should restart sooner than the company had expected because of the anticipated volume boost for TVs, he said.

Corning rose 51 cents, or 3.3 percent, to $15.84 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 66 percent this year.

LCD glass sales account for most of Corning’s profit. Demand from China was up 60 percent in the quarter from a year earlier, and U.S. revenue rose 39 percent in January and February, Flaws said.

China Stimulus

China has earmarked 20 billion yuan ($2.9 billion) of subsidies for residents in rural areas to buy TVs and appliances as part of efforts to stimulate consumption.

“There was nothing disappointing in the results,” said Yair Reiner, a New York-based analyst with Oppenheimer & Co. “Now the question is, can the LCD market actually sustain the incredible growth rates that it’s seen.”

LG Display Co., the world’s second-largest maker of LCD TVs, said it expects to break even before the end of June, ending losses, because panel prices are showing signs of recovery.

Corning’s first-quarter net income fell 99 percent to $14 million, or 1 cent a share, from $1.03 billion, or 64 cents, a year earlier. Sales dropped 39 percent.

Job Cuts

Restructuring costs contributed to the profit decline. In January, the company said it would eliminate 3,500 jobs, or 13 percent of its workforce. In the first quarter, Corning incurred $165 million in costs, mostly for severance. The company said it will save as much as $30 million in the second quarter because of the restructuring.

Corning feels “comfortable” it will meet its forecast of $5 billion in sales this year, Flaws said today on a conference call. The company declined to give profit or sales forecasts for the current quarter. Flaws said he anticipated “significant sequential improvement in the company’s sales, gross margins and earnings before special items.”

To contact the reporter on this story: Kelly Riddell in Washington at

600450 Corning First-Quarter Profit Tops Analysts’ Estimates (Update3)

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