Specialty glass maker Corning Inc said on 9 December 2008 that it was considering permanent plant closures and additional job cuts as US sales of LCD televisions rose less than expected in November 20…
Specialty glass maker Corning Inc said on 9 December 2008 that it was considering permanent plant closures and additional job cuts as US sales of LCD televisions rose less than expected in November 2008. Corning, the largest maker of glass for LCD televisions and computers, also said in a statement that it was feeling pressure for pricing relief from its customers and expected to cut glass prices in the 1Q 2009. The company made the comments ahead of a 10 December 2008 presentation by its chief financial officer, James Flaws, at a Barclays technology conference. “The current end-market weakness, combined with the inventory correction, has resulted in a substantial mismatch between glass capacity and demand by our customers”, Mr. Flaws was due to tell the conference, according to Corning. The company said it expected to reduce glass prices at a higher rate in the 1Q than in recent history, but did not give specifics. Corning“s weak outlook follows bad news from Samsung Electronics, which lowered its sales and profit targets, and Sony Corp which said it would cut jobs and withdraw from unprofitable businesses under a restructuring plan. Shrinking US consumer demand has severely hurt LCD TV makers and consumer electronics retailers, and forced most industry players to revise expectations for the holiday shopping season. Corning also said that LCD TV demand outside the United States was stronger than expected, with preliminary estimates showing an increase of 28% in unit sales in Japan in November and a rise of 29% in European demand in October 2008. In China, LCD TV unit sales were up an average of 31% in September and October 2008 from a year earlier, which Corning said was slightly lower than expected. “We were encouraged by this strong performance in the weak economic climate”, Corning said Mr. Flaws was to tell the conference. “While the sales growth rates are lower than our original expectations, we were pleased to see the resiliency of this product with consumers”. “This gives us a measure of confidence there could be continued growth in this market next year”. The tough economy has hurt all of Corning“s businesses, except Life Sciences, and the company is “moving rapidly to resize its current operations to align with a lower sales rate”. Potential moves include permanent manufacturing capacity consolidation, reducing operating expenses to be flat or lower than 2008, and lay-offs. Corning expects to reduce 2009 capital spending to USD 1.1 billion, of which about USD 450 million relates to construction completed in 2008.