Corning Inc. stock dropped nearly 11 percent on Tuesday after the company lowered its fourth-quarter earnings forecast and announced it was cutting back its glass manufacturing capacity.
The move was blamed on slow sales of LCD glass for TVs, in large part because a major South Korean customer backed out of a contract. Sales of Gorilla Glass for tablet computers will also be slower than expected, Corning Inc. announced.
“It came as quite a surprise to the stock market, and that’s why we dropped about 10 percent,” Flaws said. “But I will point out, it’s not a reflection of the overall health of the company.”
Well, despite some “turbulence” in the LCD market, worldwide TV sales are still growing, Flaws said. Flaws is hoping the contract matter with the undisclosed South Korean customer can be resolved.
Gorilla Glass is used in 500 products by 33 major brands, he noted.
And there are no layoffs anticipated by the overall cutback in glass production, he added.
“It’s just a response to where the market is now,” Flaws said. “We could restart it with a month’s notice.”
Furthermore, Corning Inc.’s telecommunications, environmental technologies and life sciences branches are seeing growth, Flaws said.
The company is looking at total sales for 2011 to be nearly $8 billion, the highest annual sales the company has ever had, he said. And the company is still expecting to hit the $10 billion mark in annual sales in 2014.
Corning Inc. has what Flaws called a “fortress” balance sheet.
“A few years ago, we had $2 billion in cash and $5 billion in debt,” he explained. “We now have $6.5 billion in cash and only $2 billion in debt.”
That means that while Corning Inc.’s top executives are keeping a wary eye on economic indicators and bracing for the possibility of another recession, the company is “well prepared to withstand tough times,” Flaws said.
Also Thursday, Flaws discussed how the company has invested $2.5 billion in capital projects this year, including a $400 million expansion under way at the Sullivan Park research and development facility in Gang Mills. Several hundred jobs have been added there over the past few years, with more hires possible in 2012, Flaws said.
He also discussed some of Corning Inc.’s new product lines, including a recently unveiled new display glass called Lotus, and solar panels that will be stronger, lighter and “20 to 30 percent more efficient” than those on the market today.
Flaws capped things off by showing “A Day Made of Glass,” a video showcasing futuristic possible uses for the company’s display glass that’s had 16 million plays on YouTube.
Corning Inc. stock rebounded in the two days following Tuesday’s plunge, closing up 20 cents at $13.47 on Thursday.