Corning earnings surpass expectations on strong LCD sales

Corning (GLW), the 158-year old glass manufacturer, reported third quarter profit down 16 percent on Monday. But Wall Street cheered as the results beat expectations on strong demand for LCD screens used in flat-panel televisions and laptops. Corning, the world's biggest maker of LCD glass with over 50 percent market share, said it earned $643 million, or 41 cents a share, in the last quarter, down from $768 million, one year earlier, on revenue of $1.5 billion.

"The improvement we have seen over the past two quarters has increased our optimism for the fourth quarter," Wendell P. Weeks, Corning's chairman and chief executive officer, said in a statement.

"Retail sales for LCD televisions remained strong throughout the third quarter, and we believe this will continue into the fourth quarter, which is typically the heaviest retail buying period. This demand has allowed the global LCD supply chain to maintain appropriate inventory levels." Corning shares were trading up nearly one percent in early activity Monday morning.

Corning, which was founded in Williamsburg, Brooklyn in 1850, before moving upstate to the New York town that bears its name, has managed a remarkable transition into the digital era, and now controls over half of the LCD glass screen market. The company -- a perennial Fortune 500 firm -- employs more than 23,000 people worldwide and saw $5.9 billion in sales for the 2008.

Corning said that sales in the Display Technologies segment -- its LCD division -- were $679 million, slightly higher than the second quarter. The company said that third quarter sales were "impacted by an earthquake in Japan that affected production at the company's LCD facility in Shizuoka in August." Currency movement had a positive impact on display sales in the quarter, the company said.

Looking ahead to the fourth quarter, the company anticipated strengthening performance. "Although a portion of our glass production at the Taichung facility has been impacted by a power disruption, we remain confident that the strong performance in our display business over the last two quarters will continue in the fourth quarter of this year," James B. Flaws, vice chairman and chief financial officer, said in a statement.

In a good sign for the economy, Flaws said that global consumer demand for LCD-based TVs in on the rise. "In our Display segment, global retailers are expected to offer attractive pricing for LCD televisions, which is likely to result in continuing robust demand through the fourth quarter," Flaws said.

Paul Gagnon, an analyst at DisplaySearch, a market-research firm based in Austin, Texas, said that consumers are shopping for LCD-based products, but because of the recession, most are focused on smaller sizes.

"Unit velocity is actually doing quite well right now," Gagnon told the Associated Press. "But it's for smaller screen sizes mostly, not so much growth on the 40-inch-plus part of the market."

As for 2010, company officials expressed optimism, anticipating that worldwide sales of LCD televisions next year could reach 156 million, a 20 percent increase over 2009. Additionally, the company forecast computer notebook sales to grow by about 20 percent, while desktop monitor sales are expected to increase about four percent for the year. "If these retail forecasts are correct and glass supply chain inventories remain manageable, as we expect, then next year could see very robust gains in worldwide glass volume," Flaws said.

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