LCD Glass Glut Costs Corning

Catching the company flatfooted, two of Corning's Taiwan customers cut orders for flat-panel liquid crystal display screens.

The glut-inspired move forced the tech glass maker to trim fourth-quarter LCD sales projections Thursday.

Display glass surpassed fiber-optic cable this year as Corning's largest source of revenue, and investors didn't appreciate the bad news, sending the shares down 8% Thursday.

Corning now projects fourth-quarter LCD sales will be flat to up 3% vs. the previous quarter's levels. Just over two weeks ago, the company had expected growth somewhere between 3% and 10%.

The fact that Corning is a poor predictor of its own business isn't really a surprise. For a good portion of the boom years, the company maintained that it had more fiber-optic cable orders than it could fill. Corning executives were still talking about big fiber demand even after it was clear that phone companies had shelved their ambitious network expansion plans.

Corning has since de-emphasized its optical-fiber efforts, taking a big writedown last quarter to adjust the fallen value of that business. But if big telco demands proved hard for Corning to anticipate, imagine how challenging the consumer electronics industry must be.

Vowing not to be fooled again, CFO Jim Flaws pledged last year that sudden changes in demand for display glass wouldn't catch the company by surprise the way the fiber cable collapse did. Corning says it learned its lesson from the disappointing days when customers discovered they had a surplus of so-called dark fiber, or unused cables, in the ground.

Addressing analysts on a July 2003 conference call, Flaws said "there actually are no dark displays." He went on to add that "unlike the fiber market," the LCD market is tracked by a variety of market researchers.

"We believe we have a very good line of sight where the end products are going and the pace and demand from these reputable industry sources," Flaws said.

That view apparently still isn't clear enough right under Corning's nose, in Taiwan, where a couple customers are buried in glass.

600450 LCD Glass Glut Costs Corning

See more news about:

Others also read

The glass sector has the increasingly widespread requirement of having an unlimited catalogue of parametric shapes and creating new ones in a simple way without being an expert in the field.
Glass Confusion is starting the New Year with Beginning Fused Glass group classes. The three-week course will be held Wednesdays from 10 a.m. to 1 p.m. and again from 5 p.m. to 9 p.m.
Shoaib Akhtar is going to be back on Indian TV screens. He is going to be featured in the new TV ad campaign for Asahi Glass.
Worldwide glass-substrate capacity is expected to continue to grow more than 40% each quarter through 2005, as a result of capacity expansion by existing glass-substrate suppliers and new companies joining the market, according to DisplaySearch.
Western Pennsylvania’s once-thriving glassmaking industry is dwindling, as did the domestic steel industry and for many of the same reasons: competition and cost.
Christmas got a little bluer for the local glass industry this week with the closure of yet another plant.

Add new comment