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Corning (GLW -10%) shares continue their post-earnings slide, as investors focus on dismal...

Corning (GLW -10%) shares continue their post-earnings slide, as investors focus on dismal conditions in the LCD glass industry. Prices will continue to fall rapidly, GLW warns, with no growth in the core display glass business over the next few years. "We believe Corning is approaching a new floor in terms of profitability, [and] our plan is to grow profits from this new level," CEO James Flaws says.
Comments (14)
  • Mark Selzler
    , contributor
    Comments (27) | Send Message
     
    I'm telling ya....Gorilla ware for the kitchen. Plates, bowls, etc. in translucent colors. May be a little more pricey, but certainly more durable than existing junk out there. Besides, they already have a name in "Corning Wear" and a distribution network to retail. It would be a favorite of techies. Ride the branding.
    25 Jan 2012, 11:01 AM Reply Like
  • Windsun33
    , contributor
    Comments (4254) | Send Message
     
    I would buy Gorilla kitchen ware :)

     

    I sent them an email suggesting that :D
    25 Jan 2012, 01:14 PM Reply Like
  • losbronces
    , contributor
    Comments (618) | Send Message
     
    They sold that line quite some time ago to World Kitchen LLC.
    25 Jan 2012, 02:32 PM Reply Like
  • Windsun33
    , contributor
    Comments (4254) | Send Message
     
    They sold the standard Corning Ware line yes.
    25 Jan 2012, 04:28 PM Reply Like
  • Mike Arnold, CFA
    , contributor
    Comments (1660) | Send Message
     
    I think the market is completely ignoring fundamentals. How is it that a growing and profitable company can trade below tangible book value? Realizing there has been some temporary set backs in terms of the outlook of the company with respect to the LCD market, I intend to write a piece about a sum of the parts valuation. The longer term outlook is robust for Corning, including being a leader with glass applications for a number of new markets . Not too mention the growing demand for its fiber optics offerings, environmental technologies, and life sciences products. This company is simply too cheap.
    25 Jan 2012, 11:36 AM Reply Like
  • Dan Naumov
    , contributor
    Comments (323) | Send Message
     
    The market is always forward-looking. What seems very cheap now could very easily become expensive without any movement in stock price, due to the change of the underlying market environment.

     

    I am actually one of those who sold Corning on this sell-off. I was trying to play Apple via Corning, because I felt I had already missed the Apple train by early January (on this I was clearly wrong). I expected gorilla glass shipments to skyrocket and they did.

     

    However over 40% of Corning's revenue and more than 60% of their earnings comes from the LCD glass and this is their main market. They are under very very heavy margin pressure from other glass manufacturers, especially considering that the manufacturers buying the glass from Corning are under very heavy financial pressure themselves. The price and the margins on LCD glass has went down, but as Corning's own outlook shows, there is still a lot more downward pressure.

     

    Corning is in great financial shape and it's ran by very competent people. Sadly, all their growth in non-LCD segments is very likely to be completely offset by the decreasing volume and margins in their LCD business. As a whole, Corning is priced for essentially no earning growth for the next 1-2 years and I am failing to see any reason to disagree with the market's assesment of this.
    25 Jan 2012, 02:00 PM Reply Like
  • bobolaclune
    , contributor
    Comments (46) | Send Message
     
    While I do agree that the fundamentals will remain strong, the reality is that GLW's fortunes are tied to the LCD market. If the outlook is for virtually zero growth in this segment, then Corning will naturally be hit hard. It's primary business affected by a structural shift? That requires some rethinking.

     

    I'm a big proponent of the company and its diversified segments, as you mention, but the market [unfairly] values this company as a television glass producer. Telecommunnications is a big revenue generator but only accounts for 3-5% on the bottom line. Same for Environmental Tech, Life Sciences, etc. Sure, Gorilla Glass will boost the performance of the Specialty Materials segment, but these are all drops in the bucket.
    25 Jan 2012, 02:06 PM Reply Like
  • Windsun33
    , contributor
    Comments (4254) | Send Message
     
    dnaumov - you have stated the problem precisely. Corning is in the situation of "we lose money on every sale but we make it up in volume". I think long term - 2 to 5 years - it is probably a great stock, but I don't see much upside for the next 12-18 months, at least not enough to hold onto it. I am down over 14% overall, even with some buys I made at just over $11 - so time to put the money to better use. At least I will get some capital gains losses.
    25 Jan 2012, 02:13 PM Reply Like
  • Mike Arnold, CFA
    , contributor
    Comments (1660) | Send Message
     
    The market is pricing this company like it is being wound up and shuttered. Expectations are so low now that even modest suprises the upside will move this stock higher. Remember, be greedy when others are fearful. I think there are markets we don't even know exist yet for Corning.
    25 Jan 2012, 02:18 PM Reply Like
  • Windsun33
    , contributor
    Comments (4254) | Send Message
     
    Mike, normally I would agree, but I have held GLW in some amount for over 2 years now, and of all the 300-400 stocks that I have traded since Jan 2009, it is my single biggest loser. It has been sitting on a P/E of 5.5 to 8 for ages, and never seems to do much.

     

    I may possibly buy a little bit back if things start looking better, but nothing like the 5000 shares I finally ended up with after chasing the downward spiral for 18 months. Only reason my losses were not even worse is that I picked up 1500 at a couple of cents over their all time low a while back.
    25 Jan 2012, 04:32 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Will be a buy at some point, but needs to drop lower yet.
    25 Jan 2012, 07:05 PM Reply Like
  • Dan Naumov
    , contributor
    Comments (323) | Send Message
     
    I would say Corning is a long-term buy at 12,50$ or less.
    25 Jan 2012, 07:21 PM Reply Like
  • Windsun33
    , contributor
    Comments (4254) | Send Message
     
    I will take a look at buying some back at under 12, not before then. It was the classic value trap for me. I made the age-old mistake of trying cost-average it, all the way from $18 to $11.50.
    25 Jan 2012, 10:08 PM Reply Like
  • samkatz88
    , contributor
    Comment (1) | Send Message
     
    Corning is a great company but it's products behave like commodities. Fiber was the big thing late 90's. the stock went over 100. There was a glut of fiber on the market, then the dot.com crash and the stock went down to 2.00.

     

    Then the LCD glass. Corning invests billions to build it up, has the market, huge growth. Then demand for the LCD slows, competitors come in, and another crash. Even Gorilla Glass...has competitors w/o the same trademark. Generic "fortified glass", cheaper than Corning's.

     

    I would never buy and hold this stock. I learned the hard way in 2001. Trying to post link to GLW chart here:
    http://yhoo.it/yqQ2XT
    26 Jan 2012, 12:31 AM Reply Like
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