Corning profit almost triples to $740M on high demand for LCD-TV glass; beats forecasts

Corning 4Q profit soars on TV glass demand

ROCHESTER, N.Y. — Corning Inc. said Tuesday its profit almost tripled in the fourth quarter on surging sales of glass for flat-screen televisions and computers.

The world’s largest maker of liquid-crystal-display glass, accounting for nearly two-thirds of the market, expects industry volume to grow 16.7 percent to 2.8 billion square feet this year from an estimated 2.4 billion square feet in 2009.

After an alarming slowdown in late 2008 triggered by recession jitters among LCD-TV panel makers, “we began 2009 with a high degree of uncertainty,” said Chief Executive Wendell Weeks.

But he said momentum picked up and the second half of 2009 “was particularly strong for LCD glass demand as consumers continued purchasing LCD televisions, laptop computers, and other electronic devices that use our glass.”

Corning earned $740 million, or 47 cents a share, in the October-December period, up from $249 million, or 16 cents, a year earlier. Excluding one-time items, its profit was 44 cents a share, beating Wall Street’s forecast of 42 cents a share.

Sales jumped 41 percent to $1.53 billion from $1.08 billion a year ago and exceeded analysts’ forecasts of $1.45 billion.

Shares dipped 7 cents to $18.65.

“Expectations going into the quarter were relatively high, results were good and we’re going to see estimates revised higher,” said Deutsche Bank analyst Carter Shoop. “At the same time, you have some investors concerned about slowing growth in more developed countries like the U.S.”

Domestic LCD-TV sales were down 12 percent in the first two weeks of January from a year ago when sales were boosted by the switchcover from analog to digital television broadcasting. “We’ll see those growth trends rebound later this month or in February — I think it’s a temporary phenomenon,” Shoop said.

Corning expects the glass market to be stronger in the January-March quarter than its previous forecast of slightly lower seasonal demand. Volume in its wholly owned business should be 8 percent to 12 percent higher than the fourth quarter and “flat to up slightly” in its joint venture with Samsung Electronics Co.

“We’re still finalizing our end market and glass market forecast for 2010, but they will both likely be higher than previous estimates,” Chief Financial Officer Jim Flaws said in a conference call with analysts.

Because LCD glass is its biggest business by far, last winter’s market dip prompted Corning to cut 3,500 jobs. Based in western New York, the 159-year-old glass pioneer also makes ceramic auto-pollution filters and is the world’s largest producer of optical fiber and cable. It employs 24,500 people.

Sales in its display technologies segment leaped 86 percent to $717 million from $390 million in last year’s fourth quarter.

DisplaySearch, a market-research firm based in Austin, Texas, estimates that 140.5 million LCD-TVs were shipped worldwide in 2009, up 32 percent from 2008. In North America, shipments are expected to rise 21.5 percent to 36.5 million in 2009 from 30.1 million in 2008.

Analyst Paul Gagnon projects global LCD-TV shipments will jump 22 percent to 171 million units in 2010.

While sales of LCD-TVs have been especially strong in China, “even mature markets are still doing better than expected,” Gagnon said. “Consumers buy TVs even in big downturns.”

And there’s still plenty of room to grow in the United States, Gagnon said.

“While there’s probably 300 million TVs in the U.S., maybe only a third of those are flat panels. The aspirational nature of a flat-panel TV is still very strong. People still think they’re cool and sexy.”

Sales in Corning’s telecommunications unit were unchanged from a year earlier at $405 million. An anticipated slowdown in fiber-to-the-home sales and seasonal declines in North America were offset by strong optical fiber sales in China and private-network demand in North America.

Environmental technologies sales rose 41 percent to $181 million from $128 million, driven by strong demand for auto-pollution filters as the industry rebuilds inventories.

Life-sciences sales rose 56 percent to $117 million, reflecting Corning’s acquisition of Axygen BioScience Inc. as it shifts beyond a heavy focus on display glass. It bought the maker of plastic labware and liquid handling products for research labs for about $400 million in September.

For all of 2009, Corning earned $2.01 billion, or $1.28 a share, down 62 percent from $5.26 billion, or $3.32 a share, in 2008. Sales fell 9 percent to $5.4 billion from $5.9 billion.

On the Net: www.corning.com