Corning posts higher 2Q net income as sales climb
NEW YORK (AP) – Corning Inc. posted a sharp increase in its second-quarter net income Wednesday thanks to strong sales of its glass for flat-panel televisions, computers and mobile devices.
But the company's shares retreated in morning trading amid investor concerns about overall retail demand and Corning's expectation that some of its customers will moderate production slightly in the third quarter.
The world's biggest maker of liquid-crystal display glass earned $913 million, or 58 cents per share, in the April-June period. This is up 49 percent from a profit of $611 million, or 39 cents per share, a year earlier.
Revenue climbed 23 percent to $1.71 billion from $1.4 billion.
The results surpassed Wall Street's expectations. Analysts polled by Thomson Reuters had expected Corning to earn 52 cents per share on revenue of $1.65 billion.
LCD glass is Corning's biggest business by far, and the company commands nearly two-thirds of the LCD glass market. Chief financial officer James Flaws said the company sees "substantial growth opportunities" in this segment as LCD television sets start to spread to emerging markets. And Corning expects China to soon become the world's largest market for these TVs.
Strong sales of Corning's ultra-thin, chemically strengthened Gorilla glass used in mobile devices drove sales in Corning's specialty materials segment up 54 percent from a year earlier, to $125 million. And the company said soaring demand for Gorilla will likely boost sales of the glass to $1 billion next year, especially as it reaches the television market.
Gorilla glass is already used in more than 200 devices, such including touchscreen cell phones and the increasingly popular tablet computers.
"Having a piece of glass that doesn't scratch and doesn't damage is very valuable," said Tony Tripeny, senior vice president and corporate controller. And now, Gorilla is extending into ultra-thin, frameless TV sets.
Corning, which also makes ceramic auto-pollution filters and is the world's largest producer of optical fiber and cable, said all of its segments did well during the quarter, but the latter, its telecommunications business, was a standout. Sales in this unit rose 21 percent sequentially and 1 percent year-over-year to $441 million, boosted in part by new fiber-to-the-home projects in Canada.
Sales in Corning's environmental technologies unit jumped 39 percent from a year earlier to $184 million.
Tripeny said despite investors' jitters about consumer confidence, retail demand has been "very strong," especially in China and Japan, and even Europe. He added it's been hard to correlate LCD demand with the economy, as demand for these TV sets has stayed strong.
He added that while some of Corning's customers are cutting back production rates in the third quarter, these cuts are "what we would expect, quite normal, especially after a very strong second quarter."
Corning had total cash, cash equivalents and short-term investments totaling $4.26 billion at the end of the quarter. This is up from $3.58 billion as of the end of last year. The company said it is using some of this cash to add capacity in many of its businesses to grow its revenue significantly over the next several years.
Shares of Corning, based in the New York town of the same name, fell 38 cents, or 2.1 percent, to $17.62 in morning trading amid a broader market downturn. The stock has traded in the 52-week range of $14.15 and $21.10.