Thursday, October 29, 2009

Corning 3Q09

Corning has reported net sales at $1,479 million, net income at $643 million, and EPS at $0.41. Earnings beat analyst’s expectations by $0.03.

Corning has reported sales in Display Technologies were $679 million and were slightly higher than the previous quarter. Telecommunication revenue was $450 million an increase of 3% from the previous quarter. This increase can be attributed to increased fiber sales in China and a continuously increasing demand for private networks throughout North America. Environmental Technologies revenue was reported at $167 million, an increase of 27%. This increase is can be attributed to high demand for automotive environmental products spurred through the “Cash for Clunkers” program. Specialty Materials revenues were reported at $90 million an increase of 27% attributed to high demand of “Gorilla Glass” used in notebooks and portable electronics. Life Sciences revenue was reported at $92 million, a $12 million increase from the second quarter. Corning’s Life Sciences segment has acquired Axygen Bioscience Inc.

Management expects Display Technology volume to be flat to slightly down in the fourth quarter. They expect a natural decline in Telecommunications and Environmental Technology due to normal seasonal trends. Demand for LCD televisions should remain high as retailers continue to compete for low pricing of television units.

I feel that the thesis originally created for Corning remains intact. LCD sales will continue to increase as more competitive pricing infiltrates the market and the economy begins to pick up. New environmental regulation on 2010 and 2011 car lines will continue to drive Corning’s Environmental sector. The acquisition of Axygen will continue to strengthen life sciences performance. However, there is an inherent risk of oversupply in the display technologies if LCD unit sales do not continue to grow as expected. I believe corning should continue to hold a BUY rating.

Chad Schneider

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