May 23, 2014, 1:45 PM
- Korea's ETNews.com reports Samsung (SSNLF) and LG (LGEIY) are interested in adopting sapphire cover glass for their phones, and recently asked sapphire wafer/ingot makers to submit samples.
- The site adds the companies were previously reluctant to adopt sapphire due to its steep cost, but have changed their minds following Apple's embrace of the technology.
- Like much of the industry, Samsung/LG have been avid users of Corning's (GLW +0.5%) Gorilla Glass. Sapphire cover glass is thinner, stronger, and more scratch-resistant than Gorilla Glass, but also much more costly for now. Samsung took a 7.4% stake in Corning last year as part of a deal to sell its stake in the Samsung Corning JV.
- GT Advanced (GTAT +8%), currently quite busy ramping sapphire production for Apple, has shot higher on the report. Though GT has said its Apple deal "will be subject to certain exclusivity terms during the duration of the agreement," there could still be a long-term opportunity to service other OEMs. Moreover, stronger industry demand stands to improve GT's pricing power.
- SA author Matt Margolis notes the Apple exclusivity deal doesn't cover GT's sapphire laminate solutions (enabled by its Hyperion tech).
- Sapphire wafer vendor Rubicon (RBCN +4.8%) is also up sharply, aided by an Oppenheimer upgrade.
Apr. 28, 2014, 7:55 AM
- Corning's (GLW) Q1 beat was fueled by better-than-expected numbers for its Optical Communications (fiber) and Environmental Technologies units. The former saw sales grow 26% Y/Y to $593M, better than Q4's 12% clip and beating guidance for mid-teens growth. The latter's sales rose 21% to $228M, better than Q4's 9% rate and above guidance for mid-single digit growth.
- Optical sales were boosted by North American demand, and Environmental sales by demand for heavy-duty diesel emissions products.
- Thanks to the Samsung deal, Display Technologies (LCD glass) sales rose 58% Y/Y to $1B. Adjusted volumes rose by a low-single digit % Y/Y, and (as expected) price declines were higher than in recent quarters.
- Specialty Materials (Gorilla Glass) sales rose slightly Y/Y to $261M, and Life Sciences sales rose slightly to $210M. Both units were expected to see flat growth.
- LCD glass volumes are expected to be up by a high-single digit % Q/Q in Q2, and price declines to be "significantly less" than Q1's.
- Guidance for other units: Mid-to-high single-digit Y/Y growth for Optical, low-to-mid teen Y/Y growth for Environmental, 20%-25% Q/Q growth for Specialty Materials (Gorilla Glass demand, end of inventory issues), Life Sciences consistent with a year ago.
- Gross margin rose 100 bps Q/A and fell 100 bps Y/Y to 41%. The Samsung deal led op. margin to fall 420 bps to 13.7%, but Corning says it's making "terrific progress" with integration efforts.
- Corning ended with Q1 with $5.6B in cash, and $3.7B in debt.
- Q1 results, PR
Apr. 11, 2014, 9:48 AM
- Corning (GLW -1.4%) has been cut to Neutral by UBS.
- Symantec (SYMC -1.3%) has been cut to Equal Weight by Barclays.
- TE Connectivity (TEL +1.3%) has been upgraded to Buy by BofA/Merrill.
- Imperva (IMPV +1.6%) has received a contrarian upgrade to Buy from Sterne Agee a day after falling 44% due to its Q1 warning.
- Demandware (DWRE +0.9%) has been upgraded to Outperform by BMO.
- Ellie Mae (ELLI -5%) has been cut to Market Perform by FBR.
Mar. 26, 2014, 9:54 AM
- Corning's (GLW +2.8%) earnings power will be boosted by a multi-year TV replacement cycle and its multiples could benefit from glass industry consolidation caused by the poor balance sheets of rivals, thinks Susquehanna's Mehdi Hosseini, upgrading shares to Positive.
- Hosseini also forecasts "material improvement in the cost and margin profile" for Gorilla Glass thanks to the Samsung deal and the shifting of some production from Japan to South Korea. That, in turn, will allow Gorilla Glass to maintain at least a 10x cost advantage relative to sapphire, which GT Advanced (GTAT -0.5%) is set to make large volumes of for Apple.
- He also points out 45% of 2013 Gorilla Glass demand came from tablets, a market for which sapphire could remain cost-prohibitive for a while.
- Global TV shipments fell in both 2012 and 2013, thanks to high penetration rates and a shift in consumer electronics spend towards smartphones/tablets. DisplaySearch has forecast modest growth for 2014.
Feb. 11, 2014, 12:44 PM
- Chinese sites report Apple's (AAPL +1.4%) iWatch will feature sapphire cover glass, but its next-gen iPhone won't due to cost concerns.
- Apple sapphire manufacturing partner GT Advanced (GTAT -5.1%) is selling off, while Gorilla Glass supplier Corning (GLW +1.4%) is following the tech sector higher.
- 9to5 Mac reported last week GT has received delivery of 518 sapphire chamber/furnace systems - enough, according to one analyst, to provide cover glass for 103M-116M 5" iPhones per year - and is ordering another 420 systems.
- It's worth noting Apple is generally believed to obtain a 50%+ gross margin on its latest-gen iPhones, and hasn't been scared in the past to use costlier components for the sake of improving the user experience.
Jan. 28, 2014, 9:34 AM
- 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
Jan. 28, 2014, 9:10 AM
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. 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.
Jul. 17, 2013, 12:34 PM
The iPhone 5S (AAPL +0.1%) will feature an "indestructible Liquidmetal case," thinks BGR's Jonathan S. Geller after analyzing previously-leaked SIM tray pictures and finding similarities with Vertu luxury phones that used the material. Liquidmetal (LQMT.OB +68.5%) shares have soared on the pink sheets thanks to the report. Geller also thinks (but doesn't elaborate as to why) the 5S might use sapphire cover glass; if true, that's a positive for GT Advanced (GTAT +0.4%), and an incremental negative for Gorilla Glass maker Corning (GLW -0.8%). Separately (take this one with a big spoonful of salt), Taiwan's Commercial Times reports the 5S may be delayed until year's end in order to support a 4.3" display.| Jul. 17, 2013, 12:34 PM | 20 Comments
Jun. 19, 2013, 5:30 PM
Jan. 11, 2013, 11:01 AM
Corning (GLW -3.5%) heads south following a downgrade to Neutral from Goldman. The firm argues the catalysts that drove its September upgrade - improving LCD industry fundamentals and capital allocation moves - are mostly played out in the wake of Corning's Q3 beat and Q4 pre-announcement. Moreover, it sees forex and a Q1 LCD inventory correction producing downside to estimates. Corning closed yesterday right around where it was when Goldman made its upgrade.| Jan. 11, 2013, 11:01 AM | 7 Comments