Corning Second-Quarter Profit Slips 39% as LCD Prices Fall
Corning Inc. (GLW), the world’s largest maker of glass for flat-panel televisions, reported a 39 percent drop in second-quarter earnings amid price declines for its LCD screens.
Net income fell to $462 million, or 30 cents a share, from $755 million, or 47 cents, a year earlier, the Corning, New York-based company said today in a statement. Profit excluding some items was 31 cents a share, matching the average of 18 analysts’ estimates compiled by Bloomberg.
After about six months of steep price declines amid increasing competition, Corning has been asking customers to agree to more stability, Chief Financial Officer Jim Flaws said today in an interview. The company has made agreements with almost all its customers and price declines will be more predictable in the future, he said.
“Investors were really hoping we could pull that off,” Flaws said. “We go in and negotiate with each customer and obviously we hope that what we’re offering in terms of our price and our quality and our service compared with our competitors, they’re willing to mitigate the declines.”
Corning has been expanding into new markets for glass, including its Gorilla Glass used in mobile devices made by Apple Inc. (AAPL) and Samsung Electronics Co. (005930), as the market for LCD television sets matures. Global TV shipments in 2011 fell for the first time in six years because of excessive inventory in the U.S. and Europe, and the end of Japanese government subsidies for purchases, according to DisplaySearch, a unit of researcher NPD Group.
“The No. 1 thing most people are concerned about with Corning is the impact of economies on LCD TV demand,” Steven Fox, an analyst with Cross Research, said in an interview before the results were announced. “Gorilla Glass and other products will help make up for some of the loss.”
Flaws said demand slowed in Spain and China, especially for cars, in the second quarter.
“It has us very alert to whether this is the future,” he said.
Revenue in the quarter declined 4.8 percent to $1.91 billion. Analysts projected $2.02 billion, the average of 16 estimates.
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