Corning: fibre optics growing strong

Since Roger Ackerman became Corning“s CEO in April 1996, the US company“s fibre-optic cable has become a main component of sales and profits. Fibre optics and another division, specialty materials, …

Since Roger Ackerman became Corning“s CEO in April 1996, the US company“s fibre-optic cable has become a main component of sales and profits. Fibre optics and another division, specialty materials, now account for 69% of sales and more than 85% of profits. Under Ackerman, the stock has strengthened by 31%, following a two-year 13% decline. The US$ 1.8 billion fibre-optic cable and equipment division now boasts operating profit margins of around 33% and earnings that have been growing 35% a year since 1994. With phone companies and cable operators entering newly opened markets around the world, analysts estimate the demand for the cable will grow about 25% annually for the next three years. Corning is the major beneficiary of this expansion, with 50% of the US fibre-optics market and 35% of the worldwide market. Although glass cable faces rising competition from wireless technology, Corning believes that since fibre optics can carry more data, it will prevail as the transmission medium of the future. Corning“s US$ 1.1 billion specialty materials division has operating margins of 21%, and earnings are increasing about 15% a year overall. Among its leading products is the glass used to make stepper lenses, which are needed to manufacture semiconductors. It claims to have more than 50% of the world“s stepper business.