Corning Quarterly Profit Falls 53% as Glass Prices Decline; Shares Retreat

By Alexander Yablon - Jan 25, 2012 8:47 PM GMT+0700

Corning Inc. (GLW), the world’s largest maker of glass for flat-panel televisions, reported fourth- quarter profit fell 53 percent as glass prices for LCD displays sank.

Net income declined to $491 million, or 31 cents a share, from $1.04 billion, or 66 cents, a year earlier, according to a statement today. While profit excluding some items matched the 33-cent average estimate of 21 analysts surveyed by Bloomberg, the company also said first-quarter earnings will fall amid “significant” price declines. Corning shares retreated 8.8 percent to $13.34 in pre-market trading.

“The real concern for investors is what happens in the glass industry and how they deal with excess capacity,” said Alkesh Shah, an analyst with Evercore Partners Inc. in New York. “Management is making the right decision to reduce capacity. The question is will they reduce enough, and what will competitors do.” He has an “equal weight” rating on Corning.

Corning said first-quarter earnings excluding some items may fall by 5 percent to 20 percent, without saying whether the comparison was with a year earlier or the previous quarter.

The company, based in Corning, New York, had cut its fourth-quarter forecast on Nov. 29, after price declines for liquid crystal display glass and the loss of a contract in Korea. Corning said then that earnings might drop 30 percent, not 5 percent as predicted in October.

A Corning spokesman, Daniel Collins, said the company will disclose more details about its expectations for 2012 at an investor meeting on Feb. 3.

“Considering that most of their products go straight to consumers, I think it’s still going to a tough year,” said Darice Liu, an analyst with Brigantine Advisors, citing uncertainty about the economy, in comments made before the earnings report.

Fourth-quarter sales for Corning advanced 6.9 percent to $1.89 billion, from $1.77 billion a year earlier. The average estimate of analysts was $1.85 billion, according to data compiled by Bloomberg.

The company makes glass and ceramic products, including glass panels for liquid crystal displays, Gorilla Glass found on smartphone touch screens, fiber-optic cables, industrial air filters, and life science equipment.

To contact the reporter on this story: Alexander Yablon in New York at ayablon@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net