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Corning, Inc. (NYSE:GLW) shares have been performing very poorly even as the rest of the market rallies. There are some reasons to believe the stock is cheap now and due for a rebound, but recent news from Sony (SNE) seems to confirm that the conditions for the television industry remain very difficult. Sony recently announced that it would make big changes in order to turnaround the ongoing losses by reducing TV models and increasing focus on other more profitable parts of the business. A recent article sums up the struggles Sony has had with televisions, and the plans the new CEO (Mr. Hirai) has for the company. It states:

The emphasis on three "core businesses" comes after Sony lost 714 billion yen on TVs in the past eight years as demand for its Bravia models slumped. Hirai will cut costs at the TV operations and reduce the number of models in an effort to reach the same profitability target set by former CEO Howard Stringer in 2005.

The plans for Sony to reduce emphasis on TVs seems to indicate that the company does not see a near-term improvement in profit margins and demand for the industry. Corning also recently announced news that could indicate it is trying to expand beyond the core product lines it has now. The company agreed to pay about $730 in cash to buy Discovery Labware from Becton Dickinson (BDX).

While Corning's "Gorilla Glass" has growth potential since it is used in tablet computers and mobile phone devices, it might not be enough to make up for weak margins in the television segment. Corning shares have been prone to weakness after earnings were released in the past couple of quarters, and this pattern could be poised to continue when earnings are released in the coming quarter. Based on these factors, disappointing earnings or guidance seems like a distinct possibility. Another drop in the stock could provide long-term investors with a better entry point. I think it makes sense to wait for either a lower stock price or an all-clear signal in the next quarterly report before buying.

Here are some key points for GLW:
Current share price: $13.73
The 52-week range is $11.51 to $22.05
Earnings estimates for 2012: $1.35 per share
Earnings estimates for 2013: $1.50 per share
Annual dividend: 30 cents per share, which yields 2.2%

Sony Corporation has been struggling as competitors like Apple (AAPL) take away market share. Sony was once the leader in consumer electronics, but it does not appear like it will return to that position anytime soon. Apple has created an ecosphere with the iPad, iPhone, iTunes and many more products, which leaves many other companies unable to create traction or healthy profit margins. For many companies, the best way to thrive now is to become an Apple supplier, because Apple has created barriers to entry that look daunting. Until Sony shows real signs of a turnaround, I see little reason to be invested in the stock.

Here are some key points for SNE:
Current share price: $18.73
The 52-week range is $16.16 to $30.63
Earnings estimates for 2012: a loss of $6.37 per share
Earnings estimates for 2013: a profit of 91 cents per share
Annual dividend: 29 cents per share, which yields 1.4%

Data sourced from Yahoo Finance. No guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: Why Corning Shares Could Be Poised To Drop On Earnings