Corning's Opportunity Is In The Lack Of Risk
Jeffrey Dow Jones • 70 Comments
Jeffrey Dow Jones • 70 Comments
Dec. 17, 2015, 10:59 AM
- Believing European and Chinese macro pressures are weighing on LCD TV sales, JPMorgan's Rod Hall has downgraded Corning (GLW -2%) to Neutral, and cut his target by $2 to $18.
- Hall sees LCD TV shipments dropping 2% for the second straight year in 2016, after growing 7% in 2014. "By the end of next year, depending on the macro situation, we believe consumer demand for 4K TVs is likely to be strong. However, with China and Europe flagging and the U.S. not looking particularly strong either we suspect that investors can wait longer before deciding to own stocks exposed to 4K penetration growth."
- The downgrade comes less than a week after Corning rallied on news it's selling its 50% stake in the Dow Corning silicon products JV to Dow Chemical.
Dec. 15, 2015, 6:18 PM
- The latest version of the Ford GT supercar will be the first production vehicle to have a windshield that contains Corning's (NYSE:GLW) Gorilla Glass. The GT also uses Gorilla Glass for two other applications.
- Corning and Ford (NYSE:F) state the use of Gorilla Glass lowers the car's weight by more than 12 pounds. Pound-for-pound, Corning claims Gorilla Glass has over 5x the strength of standard window glass.
- With Ford pricing the GT at $400K and aiming to sell ~250 units/year, the design win is far from a high-volume one. However, it serves as a useful reference win for Corning, which has been pitching automakers for years on Gorilla Glass' ability (for a price) to make cars lighter, more fuel-efficient, more aerodynamic (lower center of gravity), and quieter inside.
Dec. 11, 2015, 9:16 AM
Dec. 11, 2015, 7:55 AM
- Separate from its merger news, Dow Chemcial (NYSE:DOW) says it will buy the remaining stake in its 50/50 joint venture with Corning (NYSE:GLW).
- Dow says the deal will help it capture $400M in annual cost savings from the restructured ownership, and expects to yield more than $1B in additional annual EBITDA at full run-rate synergies; it is expected to be accretive to operating EPS, cash flow from operations and free cash flow in the first full year after the close of the transaction, expected in H1 2016.
- GLW will exchange its 50% interest in Dow Corning for 100% of the stock of a newly formed entity that will become a wholly owned subsidiary, which will hold ~40% ownership in Hemlock Semiconductor Group and ~$4.8B in cash.
- DOW +0.8%, GLW +5.5% premarket.
Dec. 1, 2015, 1:55 PM
- Corning (GLW +0.1%) is creating a Gen 10.5 LCD substrate glass manufacturing facility in Hefei, China next to an LCD manufacturing plant owned by client BOE Technology. (PR)
- After factoring government/commercial incentives, Corning expects a net outlay of $460M - $290M in cash and $170M in currently-owned precious metals. Using Corning's glass, BOE plans to begin mass-producing LCDs for large-size TVs by Q3 2018.
- As part of the deal, Corning has struck a long-term supply agreement with BOE for Gen 10.5 substrate glass produced by its Hefei facility. BOE has also extended a supply agreement for substrate glass manufactured at Gen 8.5 sizes and below.
- Corning notes the market for large-size TVs is expected to see a 20%+ CAGR (no timeframe is given). The company is coming off a Q3 in which its Display Technologies (LCD glass) segment saw revenue drop 25% Y/Y (11% excluding the impact of a weak yen) to $757M due to soft TV and PC demand.
Oct. 29, 2015, 8:05 AM
- The company earlier this week promised more than $10B in buybacks and dividends through 2019, and begins to deliver, agreeing with Morgan Stanley to buy back $1.25B in stock.
- The initial delivery will be for about 53.1M shares based on the current price, with the accelerated deal expected to be completed in Q1 and financed with cash on hand.
- At current prices, $1.25B would be enough to buy back just over 5% of the float.
- GLW +0.8% in thin premarket action.
- Previously: Corning plans over $10B in dividends/buybacks; LCD decline weighs on Q3 (updated) (Oct. 27)
Oct. 27, 2015, 9:46 AM
- Corning (GLW +1%) uses its Q3 report to state it plans to return over $10B via dividends/buybacks through 2019. The efforts will lower Corning's cash balance to $2B, and lead to an adjusted debt-to-EBITDA ratio of 2. Corning had $5B in cash/equivalents and $4B in debt at the end of Q3.
- The buyback authorization has been hiked by $4B, and a $1.25B accelerated buyback is planned for Q4. Corning plans to hike its dividend (current yield of 2.7%) by at least 10% annually through 2019. $812M was spent on buybacks in Q3.
- The company also promises to invest ~$10B through 2019 in its product portfolio by concentrating its "RD&E investment, capital spending, and strategic M&A on a cohesive set of three core technologies, four manufacturing and engineering platforms, and five market-access platforms."
- The Display Technologies unit (LCD glass) weighed on Q3 sales: Its revenue fell 25% Y/Y (11% exc. a weak yen) to $757M, with segment net income falling 34% to $255M. Glass volumes fell slightly Q/Q (worse than guidance for a low-single digit % increase), and price declines were moderate. CFO Tony Tripeny: "The weakening global economy, particularly in China, and the stronger U.S. dollar impacted all of our businesses,"
- Optical Communications (fiber) was healthier, with sales rising 7% to $747M and net income rising 3% to $70M. Specialty Materials (Gorilla Glass) revenue fell 12% to $288M, but net income rose 7% to $46M. Environment Technologies revenue fell 9% to $257M, and net income 33% to $38M. Life Sciences revenue fell 1% to $211M, and net income 5% to $18M.
- Guidance: LCD glass volumes are expected to drop slightly Q/Q in Q4, and price declines are expected to be smaller than in Q3. Optical Communications revenue is expected to rise by a low-to-mid single-digit % Y/Y. Specialty Materials is expected to decline by a low-teens % Y/Y. Environmental Technologies and Life Sciences are both expected to decline by a mid-single digit % Y/Y. Dow Corning core equity earnings are expected to total $80M.
- Q3 results, PR
- Update (10:10AM ET): Corning is now up 4.4%.
Oct. 27, 2015, 7:02 AM
- Corning (NYSE:GLW): Q3 EPS of $0.34 misses by $0.01.
- Revenue of $2.45B (-5.0% Y/Y) misses by $70M.
Oct. 26, 2015, 5:30 PM
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Oct. 22, 2015, 2:09 PM
- During its Q3 earnings call, Dow Chemical (DOW +3.6%) stated it might buy Corning's (NYSE:GLW) stake in the companies' Dow Corning silicon product JV, as part of a broader effort to restructure its JV interests.
- Dow added talks have already been held with Corning. The company disclosed last year Corning wanted out of the JV, following its 2013 deal to buy Samsung's stake in an LCD glass JV.
- Dow Corning's sales fell 5% Y/Y in Q2 to $1.42B, thanks to a strong dollar and weak polysilicon sales to solar manufacturers. Adjusted net income nonetheless rose 27% to $127M, aided by strong demand within the JV's high-margin silicones business.
- Earlier: Dow jumps on Q3 EPS beat, accelrated buyback, restructuring efforts
Sep. 16, 2015, 11:50 AM| Sep. 16, 2015, 11:50 AM | 9 Comments
Sep. 15, 2015, 11:28 AM
- Declaring the company to be a large-cap value play on the 4K TV upgrade cycle and specialty smartphone glass (e.g. Gorilla Glass, Project Phire), Deutsche's Vijay Bhagvath has launched coverage on Corning (GLW +1.6%) with a Buy rating and $21 target.
- The launch comes a week after long-time Corning client Apple announced the iPhone 6S/6S+ would have "the strongest cover glass used on any smartphone in the world” thanks to a dual ion-exchange process that makes the glass stronger on the molecular level." Corning launched Gorilla Glass 4 10 months ago, and has also been working on a scratch-resistant cover glass called Project Phire.
- Shares go for 12x a 2016 EPS consensus of $1.53.
Sep. 9, 2015, 3:06 PM
- Not surprisingly, the 4.7" iPhone 6S and 5.5" 6S+ (AAPL -0.6%) look similar to their predecessors on the outside, save for the addition of a rose gold color. On the inside, haptic 3D Touch sensors have been added (in-line with rumors). They enable tactile feedback for actions, as well as pressure-sensitive controls (i.e. pressing hard on a screen brings up content/menu options that don't appear if one presses lightly).
- The Mail, Music, Camera, Maps, and Messages apps support 3D Touch, as does the Home screen. Facebook/Instagram, Dropbox, and Tencent are among the developers initially supporting it.
- iPhone 6S/6S+ specs: As expected, the 6S/6S+ run on an A9 CPU: Apple promises up to 70% higher CPU performance, and up to 90% higher GPU performance, than the A8. An M9 motion co-processor is now built into the CPU, and always on - NXP (NXPI -1.1%) has been manufacturing standalone motion co-processors for Apple. The cover glass - possibly Corning's (GLW -0.7%) Gorilla Glass 4 - is declared to be the industry's strongest.
- The rear camera's pixel count has been upped to 12MP, and the front camera's to 5MP; Apple promises no related dropoff in pixel quality. 4K video support has been added for the rear camera (also as rumored), and autofocus performance and color accuracy improved. A feature called Live Photos (leverages 3D Touch) plays a short video clip when a user hard-presses a picture.
- Pricing/availability: Subsidized pricing matches that for the iPhone 6/6+ at launch time, as do the 16/64/128GB storage tiers; 6/6+ models have received $100 price cuts . An upgrade program (a new iPhone per year, starts at $32/month) will be sold at Apple Stores. 6S/6S+ pre-orders start on Sep. 12; the phones officially go on sale on Sep. 25. iOS 9 launches on Sep. 16.
- More Apple TV details: The set-top runs on an A8 CPU (found in the iPhone 6/6+), and supports 802.11ac Wi-Fi. Its remote communicates via Bluetooth, and has built-in motion sensors (enables Nintendo Wii-like gaming). Apps from Zillow, Gilt, the MLB, and indie game developers have been demoed. 3rd-party Bluetooth gaming controllers are supported.
- A 32GB version of the new Apple TV set-top will sell for $149, and a 64GB model for $199; the devices launch in late October. The current Apple TV will continue to be sold for $69.
- Apple livestream. Live blogs: The Verge, Engadget.
- Prior Apple coverage
Jul. 28, 2015, 9:49 AM
- Corning (GLW -1.6%) spent $616M on buybacks in Q2. That helped EPS slightly beat estimates in spite of a small revenue miss. Also helping: Core gross margin rose 100 bps Y/Y to 45% (GAAP GM was flat at 42%), and R&D spend fell 8% to $191M. SG&A spend rose 5% to $337M.
- Display Technologies (LCD glass): Sales fell 20% Y/Y to $789M, thanks in large part to a $174M forex hit from a weak yen. Net income nonetheless rose 7% to $303M. Glass volume rose by a low-single digit % Q/Q, and glass prices fell "moderately," in-line with expectations. Glass volume is expected to rise by a low-single digit % in Q3; price declines are expected to remain moderate. However, Corning has cut its forecast for global 2015 LCD glass growth to 6%-7%; weak PC, tablet, and European/Latin TV sales are cited.
- Optical Communications (fiber): Sales rose 17% to $800M, and net income 26% to $77M. Corning is hiking its full-year outlook for the segment, citing strong fiber-to-the-home (FTTH) and data center demand - it expects mid-teens Y/Y growth in both Q3 and 2015.
- Specialty Materials (Gorilla Glass): Sales fell 9% to $272M, while net income rose 13% to $44M. Advanced optics product sales fell, while Gorilla Glass volumes rose at a mid-teens clip. Gorilla Glass volume (likely boosted by iPhone 6S orders) is expected to rise by a high-single digit % Q/Q in Q3.
- Environmental Technologies: Sales fell 9% to $260M, and net income 2% to $46M. Sales are expected to be down slightly Y/Y in Q3 due to forex.
- Life Sciences: Sales fell 5% to $211M, and net income was flat at $18M. Sales are expected to drop slightly Y/Y due to forex.
- Corning ended Q2 with $5.47B in cash/short-term investments, and $4.01B in long-term debt.
- Q2 results, PR
Jul. 28, 2015, 7:17 AM
- Corning (NYSE:GLW): Q2 EPS of $0.38 beats by $0.01.
- Revenue of $2.52B (-2.3% Y/Y) misses by $20M.
Jul. 27, 2015, 5:30 PM
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Corning, Inc. develops and manufactures specialty glass and ceramics. The company provides glass for notebook computers, flat panel desktop monitors, LCD televisions, and other information display applications; optical fiber and cable and hardware and equipment products for the... More
Industry: Diversified Electronics
Country: United States
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