Seeking Alpha

Corning's pricing guidance, margins disappoint; shares fall

  • Though Corning (GLW -7.8%) beat Q4 estimates and is guiding for its display technologies (LCD TV/monitor glass) volumes to be "in-line with normal seasonality" in Q1 (down slightly Q/Q), it also "expects LCD glass price declines to be higher than previous quarters."
  • Price declines are expected to "return to moderate levels" afterwards, and Corning expects 2014 retail demand (in terms of sq. feet) to be "up a mid-to-high single digit percentage."
  • Display technologies sales (33% of total) fell 5% Y/Y in Q4 to $665M after growing 7% in Q3; the segment's core earnings were flat. Optical communications (fiber) sales rose 12% to $605M vs. 24% in Q3, but an unfavorable mix and shutdowns led earnings to drop 18%.
  • Specialty materials (Gorilla Glass) sales fell 29% to $285M vs. a 10% drop in Q3 (customer inventories are blamed). But sales are expected to be flat in Q1. Environmental technologies +9% to $238M vs. -3% in Q3, life sciences (lifted by M&A) +14% to $185M vs. +39%.
  • Environmental sales are expected to be up by a mid-single digit % in Q1 and optical sales by a mid-teens %. Life sciences sales are expected to be flat.
  • Q4 gross margin was 40%, down 400 bps Q/Q and 200 bps Y/Y. Gorilla Glass declines and optical mix are blamed. Thanks to the Samsung deal, $1.08B was spent on buybacks, which boosted EPS. SG&A spend -7% Y/Y to $332M, R&D -23% to $169M.
  • Q4 results, PR
Comments (4)
  • twogo
    , contributor
    Comments (94) | Send Message
     
    Ouch. It's ugly when basically the only thing supporting a move up is the engineering of a stock buy back.
    28 Jan, 09:43 AM Reply Like
  • chuckbryden
    , contributor
    Comments (5) | Send Message
     
    This stock continues to disappoint. I think it's time for new management. How they screw this up is beyond me.
    28 Jan, 11:15 AM Reply Like
  • chris293
    , contributor
    Comments (174) | Send Message
     
    After the holidays, isn't it normal for demand and sales to fall? This is just like the worry over China. China's growth is going too fast one minute, then China's growth is too slow the next minute. Sure, a minute could be some years, but if we in the U.S. take care of ourselves and continue to invent, develop, market, and sell useful goods and services through out the world then who cares about other markets. The other markets are just like a baby with a new tooth and naturally have growing pains. We just have to ensure an honest world market.
    28 Jan, 01:27 PM Reply Like
  • LovedJames
    , contributor
    Comments (2) | Send Message
     
    So are we selling or holding
    4 Feb, 04:48 PM Reply Like
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