Corning posts loss on restructuring

New York-based, US glass producer Corning Inc. posted a third-quarter net loss on restructuring costs and slumping revenue, and said its fourth-quarter results will not meet expectations.
The maker o…

New York-based, US glass producer Corning Inc. posted a third-quarter net loss on restructuring costs and slumping revenue, and said its fourth-quarter results will not meet expectations. The maker of optical fibre and components, which has begun a broad restructuring that includes idling plants, posted a net loss of US$ 220 million, or 24 cents a share, compared with year-earlier net income of US$ 254 million, or 28 cents a share. Revenue dropped 21% to US$ 1.51 billion from US$ 1.92 billion, due primarily to declines in the telecommunications segment. The latest results included a US$ 222-million restructuring charge, and both quarters“ figures include discontinued operations and other expenses. Excluding those items, Corning said it earned US$ 85 million, or nine cents a share, down sharply from US$ 317 million, or 35 cents a share, a year earlier. Corning warned earlier this month that earnings excluding items would come in at between two cents and six cents a share. At the time, the mean estimate of analysts surveyed by Thomson Financial/First Call was for earnings of 12 cents a share. The company blamed its third-quarter loss primarily on “significant” losses in its photonics business, which posted a “modest” profit a year earlier. Sales of photonics fell 56% to US$ 69 million in the period. For most of the year, Corning has focused its restructuring efforts on photonics – small parts used to beam light across optical fibre and allow for high-speed transmission of communications traffic. But so far its efforts have not paid off. Early in October, Corning slashed its full-year sales projections for photonics to between US$ 475 million and US$ 500 million, compared with previous projections of as high as US$ 1.8 billion. Like other optical-equipment makers, Corning has suffered through a year-long slump, as telecom operators slammed the brakes on network-expansion plans. The resulting turmoil has forced Corning to cut a total of 12,000 jobs by the end of the year and to shut down manufacturing plants for the last two months of 2001. The company has set a US$ 1-billion charge to cover the cost-cutting moves, roughly a third of which was taken in the third quarter. Corning said its fourth quarter will be hurt by the idling of its optical-fibre manufacturing operations planned for 1 November. As a result, the company is projecting a loss, excluding charges, of 20 to 25 cents a share on sales of about US$ 1 billion. Fibre volume for the quarter should be “less than half” of the year-earlier amount, with premium fibr representing 10% of the current quarter“s total volume, the company said. Corning said earlier this month that the fourth quarter would likely produce a loss, though the company did not provide any specific figures. Analysts were expecting a fourth-quarter loss of six cents a share. The company also plans to trim capital spending to about US$ 700 million for 2002, anticipating that “all expansion projects in the telecommunications segment are on hold indefinitely and that expansion of the liquid-crystal display glass business has slowed to keep pace with market growth.”