Corning's Opportunity Is In The Lack Of Risk
Jeffrey Dow Jones • 70 Comments
Jeffrey Dow Jones • 70 Comments
Dec. 9, 2014, 10:16 AM
- In a PR issued ahead of a Barclays conference presentation, Corning (NYSE:GLW) says it now expects global LCD glass demand to rise by a low-single digit % Q/Q in Q4, better than prior guidance for a slight decline. Corning forecasts its glass growth to be in-line with market growth.
- Also, Q4 price declines are expected to be "even more moderate than anticipated at the beginning of the quarter.," and Corning expects 2015 price declines to smaller than 2014's due to strong LCD TV demand, a weak yen, and tightening supplies. Demand for both larger sets and 4K TVs is giving the industry a boost.
- Also: Corning says Samsung is using recently-launched Gorilla Glass 4 (offers improved damage resistance) in its high-end Galaxy Alpha phone.
- LCD driver IC vendor Himax (HIMX +2.1%) is following Corning higher on a morning the Nasdaq is down 1.1%. Large-panel drivers accounted for 28% of Himax's Q3 sales.
Dec. 3, 2014, 2:41 PM
- Corning (GLW +2.6%) has hiked its quarterly dividend by 20% to $0.12/share. That's good for a 2.2% yield at current levels. The glass giant's Q1 dividend will be payable on March 31 to shareholders on record as of Feb. 27.
- Corning has also authorized a new $1.5B buyback. It launched a $2B buyback a year ago, and later used it to strike a $1.25B accelerated share repurchase deal with Citi.
- The announcement comes a day after Corning announced a deal to buy Samsung's optical fiber/cable unit, a move that bolsters the Asian presence of Corning's already-sizable optical fiber business. The company's optical communications sales totaled $698M in Q3, +7% Y/Y and equal to 26% of total revenue.
- Shares have rallied following the dividend/buyback announcement, and aren't far from a 52-week high of $22.37.
Dec. 2, 2014, 4:11 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) is selling its fiber optics business to U.S. glass panel supplier Corning (NYSE:GLW).
- The sale includes Samsung Electronics' production facilities for the business in China and South Korea, a company spokeswoman said, although she declined to comment on details of the sale, including the price.
Nov. 20, 2014, 6:52 PM
- In lab tests, Gorilla Glass 4 was up to 2x as likely to survive a 1-meter, face-down, drop onto a rough surface as Gorilla Glass 3 and other alternatives, Corning (NYSE:GLW) claims - a survival rate of "up to" 80% was seen overall. At the same time, Corning promises GG4 delivers the same optical clarity as its predecessors.
- GG4's launch comes after Apple opted against using sapphire cover glass (thinner and more scratch-resistant than Gorilla Glass) in the iPhone 6/6 Plus, reportedly after tests resulted in sapphire cracking during drops. Would-be sapphire supplier GT Advanced is in the middle of bankruptcy proceedings.
- It also comes after Corning guided for Specialty Materials revenue (driven by Gorilla Glass) to fall by a low-to-mid teens % Q/Q in Q4; soft tablet demand and competition from low-end glassmakers is believed to be taking a toll. Analyst Paul Semeza. "Generally those cheaper solutions are not as good, in physical durability. But for low-end products they could be good enough."
- In addition to mobile OEMs, improved damage-resistance could appeal to automakers - Corning has been trying to sell them on Gorilla Glass' weight-saving potential.
Nov. 17, 2014, 5:40 PM
Nov. 12, 2014, 12:34 PM
- Corning (GLW -0.5%) and Zhone (ZHNE +5.4%) plan to co-market a network solution for enterprises that pairs Corning's fiber connectivity and distributed antenna hardware with Zhone's FiberLAN passive optical network (PON) gear.
- The companies declare the offering, which leverages Corning's ONE Wireless enterprise network platform, will allow companies to "deploy an integrated fiber network solution that includes both the electronics and passive fiber optic components in one converged solution."
- Zhone is rallying following the news. Corning's optical division, best known for its optical fiber offerings, accounted for a quarter of the company's Q3 sales.
Oct. 28, 2014, 10:07 AM
- Corning (GLW +1.2%) is guiding for Specialty Materials core sales (includes Gorilla Glass) to "decrease sequentially by a low-to-mid teen digit percentage, reflecting the absence of new product launches that occurred in the third quarter."
- While the iPhone 6 is believed to use Gorilla Glass, soft tablet sales have weighed on Specialty Materials' performance. On the other hand, auto industry interest in Gorilla Glass (for solutions that can lower weight) is growing.
- LCD glass volume is expected to be flat to down slightly Q/Q, and LCD price declines more moderate. Full-year global retail glass demand is forecast to be up 10%, and demand for 4K TVs and larger sets is expected to boost 2015 sales.
- Optical Communications is expected to grow by a mid-single digit % Y/Y, and Environmental Technologies to grow by a high-single digit %. Life Sciences is expected to be flat.
- Q3 segment performance: Display Technologies sales (boosted by the Samsung deal) +62% Y/Y to $689M; Optical +7% to $650M; Environmental +25% to $282M (diesel emissions product demand); Specialty Materials +0.3% to $327M; Life Sciences -0.5% to $214M.
- Gross margin was 42.9%, +130 bps Q/Q and -70 bps Y/Y. SG&A spend -3% to $256M, R&D +8% to $199M. $200M was spent to repurchase 9.6M shares.
- Shares opened lower, but have quickly moved higher.
- Q3 results, PR
Oct. 28, 2014, 7:18 AM
- Corning (NYSE:GLW): Q3 EPS of $0.40 beats by $0.03.
- Revenue of $2.65B (+25.6% Y/Y) beats by $20M.
- Shares +1.17% PM.
Oct. 27, 2014, 5:30 PM
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Oct. 23, 2014, 5:01 PM
- Along with its Q3 results, Maxwell (NASDAQ:MXWL) has announced it's partnering with Corning (NYSE:GLW) to develop new ultracapacitor technologies.
- The companies declare "Maxwell's expertise in ultracapacitor cell design, manufacturing processes and market-leading capacitive energy storage product designs" will be paired with "Corning's expertise in high-performance materials, analytical capabilities and technology innovations." They aim to address tech challenges related to "energy density, lifetime, operating environment, form factor and cost."
- MXWL +14.9% AH thanks to the partnership, its Q3 beat, and its Q4 guidance: The company expects revenue to be up "as much as" 20%-25% Q/Q. That implies a range of $49.9M-$52M, well above a $44.4M consensus. Strong demand from the Chinese hybrid bus and wind energy markets are contributing to the growth.
Oct. 14, 2014, 10:11 AM
- In spite of its September/October selloff, BofA/Merrill's Wamsi Mohan has downgraded Corning (GLW +0.1%) to Neutral, and cut his target by $4 to $20.
- Mohan cites the potential for slowing TV unit growth (tough World Cup comps and China's delayed HD transition), slower-than-expected 4K TV growth, a lack of a pickup in Gorilla Glass growth (previously hurt by inventory corrections), and a weak yen.
- His 2015 and 2016 EPS estimates have been cut by $0.07 apiece. Corning's Q3 report arrives on Oct. 28.
Oct. 7, 2014, 1:44 PM
- In the wake of GT Advanced's (GTAT +132.5%) bankruptcy filing, the WSJ reports Apple (AAPL -0.2%) chose not to use sapphire cover glass for the iPhone 6 following tests in which sapphire "proved brittle, cracking when phones were dropped from various heights and angles."
- A September Time column noted this potential issue (among others). iPhone Gorilla Glass supplier Corning (GLW -1.1%) must be pleased to see the report.
- The WSJ also reports (not surprisingly) Apple is withholding a final $139M prepayment to GT, which depended on operational targets being hit.
- Susquehanna thinks Apple may take possession of the GT sapphire equipment at Apple's Mesa, AZ facility, given its prepayments ($440M to date) were "structured as secured debt." GT shares are rebounding today, but are still only at $1.85.
- An App Store support page indicates 47% of iOS users are now on iOS 8, up just slightly from 46% as of Sep. 21. Bugs related to mobile connectivity (since fixed) and iCloud Drive could be slowing uptake, as might complaints about Wi-Fi speeds and battery life.
- Digitimes, historically better at reporting on supply chain activity than new product features, reports Apple has two 12.9" iPad prototypes: One is a standard tablet, and the other a 2-in-1 device supporting both iOS and Mac OS.
- Tim Cook famously panned the idea of an integrated tablet/PC. Moreover, iOS and Mac OS currently rely on different CPU architectures - the former uses ARM, and the latter x86.
- Digitimes also reports Apple has boosted iPhone 6 Plus production relative to the iPhone 6, following strong 6 Plus demand. Fiksu's data still shows the iPhone 6 having a 3.8x usage edge over the supply-constrained 6 Plus. However, early Chinese registration data showed a nearly even split between the phones.
Oct. 6, 2014, 2:08 PM
- Corning (GLW +1%) has gradually moved higher after Apple sapphire supplier GT Advanced filed for Chap. 11 bankruptcy. GT hasn't yet provided details about the role Apple played in its move.
- Corning sold off last year after GT announced a major partnership with Apple. Last month, Apple announced two of its three Apple Watch models will feature sapphire cover glass, but it opted against using sapphire to cover the iPhone 6's displays - all signs suggest Gorilla Glass is being used.
Sep. 6, 2014, 8:43 AM
- The "total" yield of a company combines the dividend yield and the buyback yield - that is the yield boost from reducing the total amount of shares outstanding. Together with S&P's Howard Silverblatt, Barron's puts together a list of the top 20 companies in the S&P 500 based on "total" yield.
- While buybacks don't guarantee a strong stock - witness consistent buyback champs like IBM and Kohl's (NYSE:KSS) - Warren Buffett goes to bed at night praying for IBM's share price to go down so the company can buy back more stock for a given dollar amount (though The Oracle has said he doesn't expect this logic to win many fans).
- The flip-side are those companies - financials and energy come to mind - who tend to buy back stock at high prices only to find themselves forced to reissue it at lower prices when times get tough. A consistent plan helps, and Travelers (NYSE:TRV), under CEO Jay Fishman, has been maybe the best example of this - halving the share count since the end of 2006.
- ETFs? The Powershares Buyback Achievers Portfolio (NYSEARCA:PKW) gained 45.6% in 2013, 1,300 basis points better than the S&P 500. Since inception in 2006, it's up an annualized 9%, more than 200 basis points better than the S&P. A newcomer - the Cambria Shareholder Yield ETF (NYSEARCA:SYLD) - has beaten the S&P by about 250 basis points since its May 2013 inception.
- The list (ranked in order of "total" yield): ADT, CAM, CF, MOS, MPC, VIAB, GLW, ITW, STX, IBM, NOC, CTL, TRV, VRSN, IR, CCE, KSS, NTAP, HES, DO.
Aug. 20, 2014, 1:27 PM
- Following a CC with compound semi consulting firm Yole Development about GT Advanced's (GTAT -2.4%) supply deal with Apple, CLSA's Mark Heller reports Yole believes at least one iPhone featuring sapphire cover glass will launch next month. However, it also thinks GT and Apple's sapphire finishing suppliers "are still struggling with yields."
- Yole estimates Apple's all-in sapphire cost is at a steep $25 for a 4.7" display, assuming a 30% growth yield and 60% finishing yield - that's over 8x the $3 cost estimate other analysts have provided for Gorilla Glass (GLW +1.5%) panels. GT is assigned an $8.90 ASP.
- At the same time, Yole thinks costs could drop to $16 if growth and finishing yields respectively improve to 60% and 75%, boosting GT's margins along the way.
- Heller writes Yole's base scenario suggests only 4.7M 4.7" sapphire displays, or 3M 5.5" displays, will be available by September. Worth noting: With Apple having reportedly placed orders for 70M-80M iPhone 6 units, those numbers appear conservative in the event at least one of the models fully uses sapphire.
- Corning is moving higher. The company stated last month Gorilla Glass sales have been hurt by "lower-than-expected sales for planned new models."
- Earlier: CLSA downgrades GT Advanced to Underperform
Jul. 29, 2014, 9:29 AM
- Corning's (NYSE:GLW) Q2 gross margin was 41.6%, +60 bps Q/Q but -300 bps Y/Y and driving the quarter's EPS miss.
- Contributing to the margin pressure: specialty materials (Gorilla Glass) sales, which tend to carry higher margins, were roughly flat Y/Y at $298M. Gorilla Glass sales missed expectations due to soft retail demand for smartphones/tablets and "lower-than-expected sales for planned new models." That could be a reference to Apple's sapphire production ramp ahead of the iPhone 6 launch.
- On the other hand, LCD glass division sales (boosted by the Samsung deal) rose 62% Y/Y to $1.1B, with glass volumes growing by a low-teens % Q/Q (better than expected). Price declines were moderate, as expected.
- Optical communications (fiber) sales were also better than expected, rising 14% to $601M. Environmental Technologies grew 25% to $285M thanks to demand for diesel emission control products, and life sciences rose 2% to $223M.
- Q3 guidance: LCD glass volumes will rise by a mid-single digit % Q/Q, with price declines moderating further; optical will grow by a mid-single digit % Y/Y, environmental will grow 20%-25% Y/Y; specialty materials will grow 10% Q/Q; life sciences will be up slightly Y/Y.
- With revenue up 25% Y/Y, SG&A spend rose 20% Y/Y to $318M, and R&D spend 16% to $208M. $200M was spent on buybacks. Corning has cut its full-year capex guidance by $200M to $1.3B.
- Q2 results, PR
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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