On Oct. 4, Standard & Poor's placed its long-term ratings on Corning Inc. on CreditWatch with negative implications. At the same time, the short-term ratings on Corning were affirmed and are not on CreditWatch.
The firm is experiencing rapidly deteriorating global business conditions in all of its major sectors. In response, management will idle most of Corning's worldwide optical fiber manufacturing capacity for at least two months and will reduce employment by up to 4,000 additional workers beyond the previously announced projection of 8,000 employees to be terminated. Management does not foresee any significant market recovery in optical communications until late 2002 or into 2003. Also, sales continue to soften in related markets for photonics technologies and telecommunications hardware and equipment.
In other sectors, healthy volume growth in liquid crystal display glass will be more than offset by price declines and unfavorable currency translation effects; sales decreasing 10% from 2000 results. In addition, due to weakening in the global automotive market, sales and profits in environmental technologies will be down.
Corning will record a charge of up to $1 billion in the second half of 2001, up from a previous estimate of $300 million to $400 million. About two-thirds of the charge will be non-cash. The company's liquidity remains satisfactory, with over $1 billion in cash on hand to support operations during this business downturn.
Standard & Poor's will review management's plans to cut costs and will assess whether the company can meet future operational and financial needs in a way that supports current credit quality.
From Standard & Poor's CreditWire