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Q3 Results
The New York-based company's third-quarter net income was $643 million or $0.41 per share, down 16% from $768 million or $0.49 per share a year ago.
On a non-GAAP basis, net income totaled $654 million, a decline of 11%, compared to $732 million in the prior-year quarter. Non-GAAP per share earnings dropped 9% to $0.42 from $0.46 in the same quarter of last year.
On average, 17 analysts polled by Thomson Reuters expected the company to post earnings of $0.39 per share. Analysts' estimates typically exclude special items.
Quarterly net sales amounted to $1.48 billion, a decline of 5% from the previous year's net sales of $1.56 billion, and fell shy of twelve Wall Street analysts' consensus revenue estimate of $1.42 billion for the quarter.
Wendell Weeks, chairman and chief executive officer, said, "Retail sales for LCD televisions remained strong throughout the third quarter, and we believe this will continue into the fourth quarter, which is typically the heaviest retail buying period. This demand has allowed the global LCD supply chain to maintain appropriate inventory levels."
Segmental Analysis
The company's Display Technologies segment generated third-quarter net sales of $679 million, down from $696 million in the year-earlier quarter, impacted by an earthquake in Japan that affected production at the company's LCD facility in Shizuoka in August. Display sales were positively impacted by foreign exchange rate movements in the quarter.
Telecommunications segment sales totaled $450 million, a decline from the prior-year's $496 million, impacted by a slowing of fiber-to-the-home demand in North America. Meanwhile, the segment saw continued strength in optical fiber sales in China, as well as strong demand for private network products in North America.
Third-quarter sales at Environmental Technologies division decreased to $167 million from $177 million in the last year. Corning noted that the improved automotive product demand was likely the result of governmental incentives within these regions, including the now-ended U.S. "cash for clunkers" program, and diminished global inventory levels. The company also experienced strong demand for its heavy-duty diesel products due to manufacturers purchasing product ahead of new 2010 U.S. emissions regulations.
Specialty Materials segment sales were $90 million, down from $101 million last year, while Life Science segment posted sales of $92 million, up from previous year's $83 million. Third-quarter sales included $7 million from Axygen Bioscience, Inc., which was recently acquired by Corning.
Corning's equity earnings were $418 million and equity earnings from Dow Corning Corp. were $92 million. Equity earnings from Samsung Corning Precision were $316 million.
Year-To-Date Highlights
For the nine-month period, the company reported net income attributable to Corning Inc. of $1.27 billion or $0.81 per share, compared to $5.01 billion or $3.15 per share in the year-earlier quarter.
Net sales for the nine months ended September 30, 2009 were $3.86 billion, down from $4.86 billion reported in the corresponding period of the previous year.
Future In Focus
Looking forward to the fourth quarter, the company projects glass volume in its wholly owned display business to be flat to down slightly sequentially. At SCP, glass volume is anticipated to be consistent quarter-to-quarter. The company also expects glass pricing at both its wholly owned business and SCP to be consistent with the third quarter. James Flaws, the company's chief financial officer, noted that without the temporary loss of glass production from Taichung, Corning had expected a quarter-over-quarter volume increase of about 5%.
Flaws added, ""In our Display segment, global retailers are expected to offer attractive pricing for LCD televisions, which is likely to result in continuing robust demand through the fourth quarter. This retail demand, along with our expectation that panel manufacturers may lower utilization rates later this quarter, should allow the industry to maintain healthy inventory levels and alleviate any over-supply concerns."
Further, the company expects its Telecom segment sales to be down 15%, due primarily to seasonally lower demand in North America. The company believes that the demand will remain strong in China. Environmental Technologies segment sales are estimated to be down between 10% and 15% sequentially, reflecting normal seasonal declines plus the expected drop in demand, following the end of the U.S. incentive program. Specialty Materials segment sales are expected to be similar to the third quarter or down 5% and Life Sciences segment sales are expected to be up 25%, driven by the Axygen acquisition.
For fiscal 2010, the company forecasts worldwide unit sales of LCD televisions could reach 156 million, a 20% increase over 2009. Additionally, computer notebook sales are expected to grow by about 20%, while desktop monitor sales are projected to rise about 4% for the year. This demand is expected to result in a worldwide glass market of at least 2.7 billion square feet in 2010, an annual increase of about 15%.
The company added that glass demand would likely vary quarter-to-quarter next year. "We believe panel makers may respond to the seasonal decline in demand by reducing utilization rates in the first quarter", Flaws said.
Therefore, the company expects first-quarter glass demand to be sequentially lower. Looking ahead to the second quarter, Corning projects utilization rates at the panel makers to snap back, as the supply chain expands to meet the seasonally stronger second half. In this environment, "we would expect second-quarter glass demand to also increase significantly," Flaws added.
Stock Quotes
Corning shares, which have been trading between $7.36 and $17.20 in the past 52 weeks, closed Friday's trading session at $15.65, up 5 cents or 0.32%, on a volume of 21 million shares.
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