Corning 1Q profit skids, but beats view
ROCHESTER, N.Y. — Specialty glassmaker Corning Inc. said Monday its first-quarter profit fell 99 percent on slumping sales and a charge for previously-disclosed job cuts.
But its adjusted earnings topped Wall Street expectations on a mid-quarter rebound in demand for its flat-screen television glass.
The world’s largest maker of liquid-crystal-display glass earned $14 million, or a penny a share, in the January-March quarter, down from $1.03 billion, or 64 cents a share, a year earlier.
Excluding one-time items, its latest profit of 10 cents a share exceeded Wall Street’s forecast of 5 cents a share.
Sales fell 39 percent to $989 million from $1.617 billion a year ago but that also topped analyst’s forecasts of $963.4 million.
Its shares rose 51 cents, or 3.3 percent, to $15.84 Monday. The stock is still down 43 percent from its 52-week high of $28.07 set May 19, 2008. It traded as low as $7.36 six months later.
After a slump in LCD glass sales at the end of 2008, the company took $165 million in pretax restructuring charges in the first quarter to pay for eliminating 3,500 jobs, or 13 percent of its payroll of 27,000.
In March, however, the company announced that it expected to turn a first-quarter profit, excluding special items, thanks to a resurgence in glass orders over the previous several weeks. On Monday, it doubled its forecast for growth of LCD-TV units from 9 percent to 18 percent.
Corning’s pessimistic tone has “greatly changed” since January, with stronger-than-expected demand for LCD televisions driving its latest estimate of glass sales to a range of 2.1 billion to 2.2 billion square feet in 2009 from 2 billion square feet in 2008, said analyst John Harmon of Needham & Co. in New York.
“They’d expected the LCD glass market to be flat with last year,” Harmon said. “Now they’re expecting growth in their most profitable business.”
Chief Financial Officer James Flaws said in a conference call with analysts that “given the difficult global economy … we were pleased to see the continued strength of LCD television sales at retail worldwide throughout the first quarter.
“We were also pleased to see demand for our glass pick up sooner than we anticipated,” he said. “We believe this is one of the several indicators during the quarter that the supply-chain contraction was ending.”
In the fourth quarter, panel makers slowed their purchase orders to try to reduce a buildup in inventories as prices fell.
Flaws reminded investors that the company is not providing specific profit or sales guidance for the second quarter.
“However, we expect to see significant sequential improvement in the company’s sales, gross margin and earnings before special items,” he said. “Second-quarter results will also benefit from our recently completed fixed cost reduction programs.”
The 157-year-old company is based in the city of Corning in rural western New York.
Sales in its display technologies segment fell 57 percent to $357 million from $829 million a year ago.
DisplaySearch, a market research firm based in Austin, Texas, estimates that about 120 million will be shipped worldwide in this year, up from 105 million in 2008.
“It could go slightly higher — there is some optimism in the supply chain right now that things aren’t going to be quite as bad as previously expected,” said DisplaySearch analyst Paul Gagnon.
In North America, shipments were expected to edge above 30 million this year from about 29.5 million in 2008.
Sales in Corning’s telecommunications unit fell 8 percent to $385 million from $421 million on weakened optical fiber sales for private networks in North America.
Environmental technologies sales fell 44 percent to $110 million from $197 million, hurt by weaker auto-pollution filter sales.
On the Net: www.corning.com
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