Fibre optic maker Corning Inc. reported fourth-quarter earnings that beat Wall Street estimates on strong demand for optical networking equipment used to boost the capacity of lines that carry Interne…
Fibre optic maker Corning Inc. reported fourth-quarter earnings that beat Wall Street estimates on strong demand for optical networking equipment used to boost the capacity of lines that carry Internet traffic. Corning said it had income of US$ 126.7 million before special items, or 51 cents per diluted share, in the fourth-quarter of 1999, compared with US$ 94.6 million, or 40 cents per share in the corresponding period in 1998. First Call/Thomson Financial, which compiles analysts“ estimates, listed its forecast for Corning as 48 cents per share. Lawrence Harris, vice president and telecommunications equipment analyst at Josephthal & Co. said Corning“s strong quarter was a result of being in a good position in a hot market. “Right now, the fibre optics sector is extremely strong and Corning benefits because it is the leading supplier of fibre as well as amplifiers that are employed in optical systems,” Harris said. The company said fourth-quarter sales reached US$ 1.2 billion, compared with US$ 927 million in the year-ago period. The company said it reaffirmed its guidance of 20% to 25% earnings growth in 2000. First Call listed its estimate for 2000 at US$ 2.34. “We are confident that positive trends from 1999 will continue and, when combined with the integration of proposed acquisitions, will result in a very successful 2000,” Corning chief executive Roger Ackerman said in a statement. Sales of Corning“s LEAF optical fibre more than doubled in the fourth quarter, compared to the same period in 1998. Sales of glass used in flat-panel display computer screens grew by 50% over the same time period, the company said in a statement. Corning CFO James Flaws said the company expected growth in 2000 to again be driven by strength in its optical fibre business and components for flat-panel display screens. He said the company had to make sure it could control expenses in the coming year. Flaws added the company also needed to ensure that the closing of the Oak Industries deal and the integration of optical fibre and cable assets it acquired from Siemens AG went smoothly. The company, based in Corning, New York, reported fourth-quarter net income of US$ 140.1 million, or 56 cents per diluted share. In the fourth quarter of 1998, Corning had net income of US$ 104.3 million, or 44 cents per share. For fiscal 1999, Corning reported operating income of US$ 476.9 million, or US$ 1.93 per diluted share, on revenues of US$ 4.3 billion. This compares with income of US$ 327.5 million, or US$ 1.39 per share, on revenues of US$ 3.48 billion in 1998. Net income rose to US$ 481.7 million, or US$ 1.95 per share, in fiscal 1999 from US$ 394.0 million, or US$ 1.67 per share in fiscal 1998. Corning, which invented fibre optic cable more than 20 years ago, signed a deal in November to buy Oak Industries for US$ 1.8 billion in stock. The merger announcement came amid a wave of consolidation in the market for ultra-high speed communications equipment. In November, JDS Uniphase Corp. signed a deal to buy Optical Coating Laboratory Inc., another maker of fibre-optic connector equipment, in a US$ 2.8 billion deal. In January, JDS Uniphase said it planned to merge with E-TEK Dynamics Inc. in a US$ 15 billion deal. Meanwhile, Corning said its offering of 13 million shares of common stock was priced at US$ 151.375 per share. The New York-based company said it intends to use the expected US$ 1.9 billion in net proceeds to pay the cash portion of the purchase price for Siemens AG“s worldwide optical fibre, cable and hardware businesses. Siemens announced in December that it will sell its entire cable and fibre optic business to Corning for about US$ 1.4 billion. The company said it also granted Goldman Sachs & Co. and J.P. Morgan, the underwriters, an overallotment option covering up to 1.95 million shares. Corning, which reported fourth-quarter earnings above expectations, will also use part of the proceeds to repay bank debt to be assumed in the merger of Oak Industries Inc., and to repay all of Corning“s outstanding commercial paper. The company posted high earnings that beat Wall Street estimates on strong demand for optical networking equipment used to boost the capacity of lines that carry Internet traffic.