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Corning Seeks Sparkling Results in Specialty Glass

By    |   Monday, 15 Aug 2011 03:05 PM

Corning (GLW) is a specialty glass manufacturer that is trying to polish its performance. The company supplies glass components to makers of television screens and computer monitors and builders of optical fiber telecommunications networks, among other types of commercial customers.

Wall Street generally sees upside potential for Corning shareholders. Most securities analysts who were following the company in early August recommended buying its stock, and a large minority had neutral hold ratings on Corning shares. Annual growth in net sales and net income resumed in 2010 after a year-over-year slump in 2009.

The Corning, N.Y., company reported in July that net sales in the six months ended June 30 rose to $3.9 billion, up 20 percent from same period last year. Corning has commercial offices and production facilities in mainland China, Japan, South Korea, and Taiwan.

Net income in the first half fell to $1.5 billion, down 13 percent from last year. Earnings per diluted share in the January to June period dropped to 95 cents from $1.09 in the same period last year.

Some of the downward pressure on earnings this year has come from declines in the sales and profits of a joint manufacturing venture between Corning and Samsung Electronics. The South Korea-based joint venture, Samsung Corning Precision, makes liquid crystal display (LCD) glass for flat-panel displays built into television sets, notebook computers and desktop monitors.

Corning reported in July that the absence of repatriation-related tax benefits in 2010, an increase in earnings in jurisdictions with higher tax rates, and the expiration of tax holidays will restrain earnings this year.

"Equity earnings from Samsung Corning Precision also will be impacted by higher taxes in 2011," Corning said in the filing.

Fitch upgrade

Credit rating agency Fitch upgraded debt issued by Corning and assigned the company a stable rating outlook in May. The company got an A- issuer default rating and senior unsecured debt rating. Fitch upgraded both from BBB+ before.

Fitch analysts Jason Pompeii and John Witt warned in their May 17 report on the upgrade that, to retain its A- ratings, Corning must offset competitive price pressure in the LCD glass market by becoming more efficient in manufacturing operations.

"The rating actions reflect Fitch's belief that Corning's overall operating results and equity earnings will remain strong, driven by the continuation of solid secular growth within the LCD glass market," Pompeii and Witt reported. But they also said the company must offset LCD price pressure "via manufacturing efficiencies" to sustain its higher credit ratings. Corning's third-quarter results will be released on or around Oct. 27.

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Corning (GLW) is a specialty glass manufacturer that is trying to polish its performance. The company supplies glass components to makers of television screens and computer monitors and builders of optical fiber telecommunications networks, among other types of commercial...
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Monday, 15 Aug 2011 03:05 PM
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