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Corning to lead LCD glass for next 5 to 10 years, says analyst

Optimism from Wall Street analysts about Corning“s continued leadership in the market for LCD glass gave the company a boost on 16 September 2005.
Shares of Corning gained USD 0.56, or 2.9%, to USD …

Optimism from Wall Street analysts about Corning“s continued leadership in the market for LCD glass gave the company a boost on 16 September 2005. Shares of Corning gained USD 0.56, or 2.9%, to USD 20.13 in midday trading on the New York Stock Exchange. The stock is close to its four-year high of USD 21.95, and has nearly doubled so far in 2005. In a research note, Merrill Lynch analyst Steven B. Fox said he was “encouraged” by a visit to Corning“s LCD glass facility in Japan because he thinks new capacity expansions will “come on more efficiently than we were anticipating.” Fox also played down market worries about a growing inventory of LCD televisions: an industry tracking firm indicated that inventory levels are in line with pre-Christmas seasonal figures, Fox said. The analyst also said retail price cuts should mitigate the risk of oversupply, noting that LCD television prices have fallen 15% in the past three weeks. “These recent price declines are driven by the start of the football season in the United States, but we think further LCD television price declines — and demand spurts — are in the cards before Christmas, around Chinese New Year, as well as the winter Olympics and the World Cup,” Fox wrote. C.J. Muse, a Lehman Brothers analyst, said Corning has about 60% of the market and should be able to keep control of the industry for the next five to ten years, putting it in a position for strong earnings growth and free cash flow generation. “With the industry migrating to next-generation motherglass sizes, panel makers are demanding thinner and lighter substrates, substrates that do not sag or warp and substrates that are defect-free,” Muse wrote in a report. “Corning has been able to take advantage of these demands, with its first-mover advantage enabled by it technological prowess and its scalable fusion technology.”

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