Profits You Can Touch

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If your smartphone is permanently attached to your hand and you can't imagine life without your iPad, than you already understand the beauty of touchscreen technology. The popularity of smartphones and tablets has spiked profits for Corning (NYS: GLW) -- the leading manufacturer of glass for touchscreen devices.

Hand it over
Demand for capacitive touchscreen technology was made popular with Apple's iPhone in 2007. This year, revenue from sales of touchscreen-enabled devices will reach $13.4 billion before soaring to nearly $24 billion by 2017, according to a report from market research firm Display Search. Everything from digital cameras to tablet computers uses touch technology, and the market for such devices is only getting bigger.

While smartphones currently account for the majority of touch panel shipments, tablets such as Apple's iPad and Amazon.com's (NAS: AMZN) Kindle Fire are expected to ship 60 million units this year. That said, the real winner is manufacturing company Corning, which should see a sizeable boost in profits as touch technology becomes the preferred display.

The Hercules of glass
In 1879, Corning manufactured the first glass light bulb for Thomas Edison. Today, it creates the thin panels of glass used as protective covering for handheld devices, notebook computers, and LCD television screens.

Corning's advantage in the touch market is the company's patented Gorilla Glass -- known for its durable and scratch-resistant display panels. This specialty glass is being used in products such as Dell's (NAS: DELL) Streak 7 tablet and LG's (NYS: LG) X300 laptop.

Dell's used Gorilla Glass on all versions of its Venue smartphone, as well as on its line of tablet PCs. The Gorilla has also been the specialty glass of choice on more than 13 of LG's products, as more companies choose Corning for its ability to handle even the toughest bumps and bruises.

By 2014, Corning expects to boost sales of the glass by more than 50%, helped by the increased popularity of touchscreen devices. The company's specialty materials segment, which is responsible for Gorilla Glass, increased sales 75% in 2010 over a year earlier.

Use in LCD
The ultra-thin Gorilla Glass the company manufactures for flat-screen TVs has earned it more than 60% of the global market for LCD glass. Last year, 45% of Corning's revenue came from its display-technologies division, which optimizes the glass for these liquid-crystal displays.

Sony (NYS: SNE) is the primary buyer of Corning's glass for use in LCDs -- a market that grew by 28% last year.

Despite investors' concerns that slower consumer spending may cut demand for LCD TVs, Gorilla Glass has helped Corning become the leading supplier to the flat-panel television market. But shareholders shouldn't overlook the potential application for Gorilla Glass in new markets, either.

Gorilla Glass is expanding into a variety of markets, including the auto industry. Corning is currently working with Hyundai on a new car concept in which Gorilla Glass is used in the car's new in-dash technology.

Glass act
In three short years, Gorilla Glass grew from $19 million in sales to more than $240 million in 2010, and the company expects sales of this segment to reach $800 million this year. Sales for the entire company for the trailing 12 months were $7.77 billion, and Corning CEO Wendall Weeks believes the company can grow that figure to $10 billion in sales by 2014.

The growth road ahead looks smooth, with sales of small-form Gorilla Glass for handhelds and IT products having already tripled that of last year's sales. Gorilla Glass is currently used by more than 30 major brands and featured on more than 200 million devices worldwide.

In touch
The company's immediate sales growth will certainly rely on the continued trend in smartphones and handhelds. Gorilla Glass should help Corning also see meaningful returns from its use in other markets, as touch displays become the standard in consumer products.

Do you see Gorilla Glass being used in next-generation automobiles, appliances, or architectural structures? Share your thoughts with us in the comments section below.

At the time this article was published
Fool contributor Tamara Rutter owns shares of Apple. Follow her on Twitter, where she goes by @TamaraRutter. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Corning, Apple, and Dell and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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