Corning reports loss in third quarter and expects low fourth quarter

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 …

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 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 tumbled 21% to US$ 1.51 billion from US$ 1.91 billion, due primarily to declines in the telecommunications segment. The latest results included a US$ 222 million restructuring charge, and both quarters“ figures include acquisition-related expenses and discontinued operations. Excluding those items, Corning said it would have earned US$ 85 million, or nine cents a share, down sharply from US$ 317 million, or 35 cents a share, a year earlier. 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 during 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. Earlier 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 yearlong 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 beginning 1 November. As a result, the company is projecting a loss, excluding charges, of 20 cents 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 fibre representing 10% of the current quarter“s total volume, the company said. Corning also stated 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. A year ago, Corning earned 34 cents a share on revenue of US$ 2.14 billion. 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 (LCD) glass business has slowed to keep pace with market growth.”