Corning sees weaker outlook as TV demand falls

Specialty glass maker Corning Inc forecast 4Q 2008 profit sharply below Wall Street expectations and said it plans to close some plants, citing slowing demand for flat-screen televisions. Corning said…

Specialty glass maker Corning Inc forecast 4Q 2008 profit sharply below Wall Street expectations and said it plans to close some plants, citing slowing demand for flat-screen televisions. Corning said 29 October 2008 that its customers, including flat-panel makers in Taiwan, were buying less glass for TVs, and it expects South Korean customers to do likewise. The global economic crisis has prompted consumers to rethink their spending habits, causing further problems for an industry where inventories were full ahead of the end-year holiday season. “The supply chain already needed to take something out and now they have weaker end-demand”, said Corning chief financial officer Jim Flaws in an interview. “It will be a correction that will be fairly severe in terms of our profitability”. Corning, the largest maker of glass for LCD televisions and monitors, plans to shut some of its glass-making operations and possibly cut jobs. Mr. Flaws said that on average, unit sales growth in LCD televisions in the US had fallen to 12% at the end of September 2008 from about 37% through the first eight months of the year. “We think they are up only single digits in the early part of October”, Mr. Flaws said in an interview. “It has been a very consistent decline over the first six weeks” since the US Labor Day holiday. As a result, Corning expects 4Q 2008 glass volumes to be 20% to 30% lower than the 3Q, which will hurt its profit margins. It sees 4Q profit of USD 0.20 to USD 0.28 a share, far short of Wall Street estimates USD 0.41 a share, according to Reuters Estimates. The news came two weeks after flat panel maker LG Display Co Ltd reported a 44% fall in 3Q net profit, adding to analyst worries about the industry“s outlook as the sluggish economy hits demand for flat panel TVs and personal computers. Moreover, Sony Corp in the third week of October 2008 cut its annual operating profit forecast by 57%, partly due to slower flat panel TV demand. Corning“s 3Q net income rose 24% to USD 768 million, or USD 0.49 a share, from USD 617 million, or USD 0.38 a share, a year earlier. Excluding special items, profit was USD 0.46 a share, beating analysts“ view of USD 0.43 a share, according to Reuters Estimates. Revenue was essentially flat at USD 1.56 billion.