Corning's Opportunity Is In The Lack Of Risk
Jeffrey Dow Jones • 70 Comments
Jeffrey Dow Jones • 70 Comments
Jan. 28, 2014, 12:05 AM
Jan. 27, 2014, 5:30 PM
Jan. 24, 2014, 5:36 PM
- Taiwan's Apple Daily reports (translation) Foxconn has built at least 100 iPhone (AAPL -1.8%) prototypes featuring sapphire cover glass. The paper also reports two existing sapphire suppliers have recently made big equipment/tooling investments; Apple already uses sapphire in its iPhone home buttons and camera lens covers.
- The report comes two months after Apple announce a major sapphire production/supply deal with GT Advanced (GTAT +0.9%), one that naturally fueled speculation sapphire will be used as a cover glass in future iDevices.
- Corning (GLW -4.1%) investors have been on edge over Apple's moves, and their potential to drive broader mobile adoption of sapphire (thereby displacing Gorilla Glass).
- Separately, 9to5 Mac reports a new Apple TV set-top is set to arrive in 1H14, and iLounge reports a refreshed Apple TV will feature "proper game support." With iOS 7 supporting physical game controllers, Apple TV has already been expected by many to become a casual gaming console. Logitech (LOGI), which has already rolled out an iPhone game controller, wouldn't mind.
- Yesterday: Apple reportedly launching two larger iPhones in 2H14
Jan. 3, 2014, 1:56 PM
- Corning (GLW +0.5%) is working with Taiwanese manufacturer G-Tech Optoelectronics to bring 3D-shaped Gorilla Glass parts to market in 2014. The glass-forming technology needed to produce the parts is said to be manufacturing-ready. (PR)
- The 3D parts target a burgeoning market for mobile and wearable devices with curved and/or form-fitting glass. Samsung and LG recently launched phones with curved OLED displays, and Apple is reportedly prepping both an iWatch and larger iPhones featuring curved glass.
- Corning has already launched Willow Glass, a bendable product that could find its way into smartwatches and other wrap-around devices. The company is looking to fend off a looming threat from sapphire glass suppliers such as GT Advanced (GTAT +1.8%), which recently struck a big supply deal with Apple.
Nov. 20, 2013, 9:22 AM
- Ahead of CFO James Flaws' 1:45PM ET UBS conference talk (webcast), Corning (GLW) reiterates it expects Q4 earnings to be down Q/Q due to both seasonality and "specific business factors," such as weakness in its optical fiber business. (PR)
- As it is, Corning's Q4 EPS consensus is at $0.28, below reported Q3 EPS of $0.33.
- Corning also states it expects Specialty Materials sales (inc. Gorilla Glass) to be down 20% Y/Y, something attributed to inventory builds a year ago. Corning previously guided for Specialty Materials sales to be flat Q/Q in Q4; that implied an 18% Y/Y drop. The company promises a subsequent return to growth, fueled by smartphone, tablet, and notebook demand.
- In an effort to address worries about GT Advanced's (GTAT) big sapphire supply deal with Apple, Corning asserts it "continues to innovate with Apple to advance the state of the art with even tougher versions of [Gorilla Glass]," and that it continues to work on improving Gorilla Glass' durability and scratch-resistance (two key selling points for sapphire).
- Shares -0.6% premarket.
Nov. 5, 2013, 11:03 AM
- GT Advanced (GTAT +23.4%) has caught four upgrades and soared to new 52-week highs after striking a huge sapphire supply deal Apple. Rubicon (RBCN +25.3%) is also flying higher. Corning (GLW -2.9%), meanwhile, is heading in the opposite direction as investors worry Apple (and perhaps also peers) will begin using sapphire instead of Gorilla Glass to cover smartphone/tablet displays.
- The deal still has some skeptics; they point to the fact GT's sapphire materials sales to Apple are expected carry much lower gross margins than its traditional equipment sales, that Apple isn't providing any purchase commitments, and that exclusivity requirements stand to limit GT's sales to other mobile OEMs. But by and large, optimism about the opening of a major new market opportunity long targeted by GT is overshadowing these concerns.
- Cantor is defending Corning, arguing sapphire will more likely be used in small form-factor Apple devices (an iWatch?) than in iPhone/iPad displays. Sterne Agee estimates Apple accounts for 10%-15% of Corning's phone-related sales.
- GT's management refrained from providing additional details about Apple on the CC (transcript); Apple tends to demand heavy secrecy from suppliers. But they did strike an optimistic tone about sapphire pricing and furnace utilization rates among traditional clients, and predicted customers will likely " start taking delivery of backlog at a faster pace, as [GT's] capacity opens up again." GT also claimed to be making good progress in commercializing its Hyperion tech (set for a 2015 launch) for solar applications;
- On the other hand, GT doesn't think the solar equipment market will "show significant opportunity" before 2015.
Nov. 4, 2013, 4:41 PM
- The deal, announced within GT Advanced's (GTAT) Q3 report, calls on GT to supply Apple (AAPL) with sapphire via furnaces the former company will own/operate at an Arizona facility owned by the latter.
- GT plans to employ 700+ people at the facility, and Apple will be providing GT with a $578M prepayment to assist with the efforts. GT will reimburse Apple for the prepayment over five years, starting in 2015.
- The magnitude of the initiative suggests Apple plans to use sapphire cover glass to protect the displays used in future iOS hardware (perhaps including 2014 iPhones/iPads). Rumors about such a move have been around for a while, heightened by Apple's use of sapphire to protect iPhone camera lenses and the iPhone 5S' home button.
- Assuming Apple uses GT's sapphire with iOS hardware displays, the deal is a negative for Gorilla Glass supplier Corning (GLW), particularly since it could encourage other mobile OEMs to embrace sapphire and improve its economies of scale. Sapphire is thinner, stronger, and more scratch-resistant than current cover glass solutions such as Gorilla Glass, but is also much costlier.
- On account of the Apple deal, GT has "accelerated the development of its next generation, large capacity ASF furnaces." The company expects these efforts to aid its efforts to offer next-gen furnaces to traditional customers in other market segments (LEDs, industrial manufacturing, etc.).
- Update: Arizona's governor's office announces Apple will be building a new facility in Mesa, AZ. 1.3K construction jobs will be created to go with GT's 700+ manufacturing jobs. Corning is now down 1.2% AH.
Oct. 30, 2013, 10:48 AM
- Though Corning's (GLW -1.6%) Q3 results and Q4 outlook are in-line with the numbers/commentary it provided on Oct. 22, shares are giving back a sliver of the massive gains they saw last week in response to the Samsung deal.
- Display Technologies sales (inc. LCD TV glass) +7% Y/Y to $689M after rising 21% in Q2. Glass volumes rose at a low-teens rate Y/Y, and price declines were "moderate."
- LCD glass volumes are expected to be down by a low single-digit % Q/Q in Q4, and price declines "consistent with recent quarters." Global TV demand is in-line with expectations. By giving Corning full ownership of Samsung Corning, the Samsung deal should boost Corning's LCD glass numbers in time.
- Telecom sales +24% Y/Y to $650M after rising 8% in Q2. But they're expected to be down slightly Y/Y in Q4 due to weakening optical fiber sales.
- Specialty Materials sales (inc. Gorilla Glass) -10% Y/Y to $326 after rising 2% in Q2. Sales are expected to be flat Q/Q, which implies an 18% Y/Y drop.
- Environmental Technologies -3% Y/Y to $225M, better than Q2's -8%. Life Sciences (boosted by M&A) +39% to $215M vs. +35% in Q2.
- Gross margin was 44%, +100 bps Q/Q and Y/Y. $209M was spent on buybacks. Opex -3% Y/Y thanks to job cuts.
Oct. 30, 2013, 7:15 AM
- Corning (GLW): Q3 EPS of $0.33 beats by $0.01.
- Revenue of $2.1B (+10% Y/Y) beats by $0.01B. (PR)
Oct. 30, 2013, 12:05 AM
Oct. 29, 2013, 5:30 PM| Oct. 29, 2013, 5:30 PM | 1 Comment
Oct. 25, 2013, 2:21 AM
- Samsung's (SSNLF, SSNGY) Q3 net profit, excluding minority interest, jumped 25% to 8.05T won ($7.76B), above forecasts of 7.94T won.
- Sales climbed 13.2% to 59T won.
- Operating profit +26% to 10.16T won, but that represents a slowdown from 47.5% growth in Q2.
- Operating profit at the mobile unit rose 19% to 6.7T won, with smartphone shipments climbing in the "mid-10% range" and tablet sales in the "mid-20%" range.
- Operating profit at the chip division more than doubled to a three-year high of 2.06T won, boosted by stronger chip prices and tighter supply
- Income at the consumer-electronics division dropped to 3450B won from 400B won, while earnings at the display division fell to 980B won from 1.17T.
- Samsung expects an extra $1.5T won ($1.4B) payment from Corning (GLW) after the latter agreed to acquire the South Korean company's display unit out of their LCD glass joint venture.
- Samsung's shares -0.2% in Seoul. (PR)
Oct. 23, 2013, 9:11 AM
Oct. 22, 2013, 5:50 PM
Oct. 22, 2013, 4:29 PM
- Corning (GLW) is taking full control of the Samsung Corning LCD glass JV, currently 43%-owned by Samsung Display. Samsung, meanwhile, is buying $2.3B worth of Corning convertible preferred shares via two transactions.
- The deal will give Samsung Display a 7.4% stake in Corning on an as-converted basis. It also features a new display glass supply agreement between the firms that lasts until 2023, and a strengthening of their R&D collaboration.
- The transactions are expected to close in Q1 2014. Corning promises "immediate earnings accretion" and cost synergies.
- Separately, Corning has announced a new $2B buyback, good for repurchasing 7% of outstanding shares at current levels.
- The company also says it expects to report Q3 revenue of $2.1B (+10% Y/Y) and EPS of $0.33 vs. a consensus of $2.1B and $0.32. Q4 numbers are expected to be lower Q/Q, due to seasonality and a major Y/Y drop in optical fiber sales. The consensus is for revenue of $2.11B and EPS of $0.33.
- Full Q3 results arrive on Oct. 30.
- GLW +20.7% AH. CC at 4:30PM ET.
Oct. 11, 2013, 9:23 AM
- Intel (INTC) has been cut to Neutral, and Nvidia (NVDA) to Underperform, by Macquarie. Intel's Q3 report arrives on Tuesday. Intel -0.6% premarket, Nvidia -0.9%.
- Micron (MU) has been cut to Underperform by Wells Fargo following its FQ4 results (I, II) and FQ1 pricing guidance. Shares -2.1%.
- Synaptics (SYNA) has been cut to Neutral by JPMorgan two days after announcing the Validity Sensors deal and forecasting strong FQ1 sales. Shares -1.5%.
- Corning (GLW) has been cut to Neutral by Piper. Shares -1%.
- Iron Mountain (IRM) has been cut to Underweight by Barclays a day after announcing CFO Brian McKeon is leaving. Shares -2.2%.
- LG Display (LPL) has been upgraded to Buy by Citi.
- Diodes (DIOD) has been upgraded to Buy by Longbow.
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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