Corning Shares Rally: Why It Might Be Time To Take The Money And Run

| About: Corning Inc. (GLW)

Major television makers are still seeing weak demand for televisions. Sharp (OTCPK:SHCAY), Panasonic (PC) and Sony (NYSE:SNE) have all recently posted losses on television sales as a competitive retail environment, and global economic weakness combine to create ongoing challenges for the industry. The television manufacturing business has become a cut-throat industry that makes it like a commodity which is driven primarily by price, rather than by unique features offered by one or two brands. With many top makers in the industry still suffering, it could be a sign that Corning's (NYSE:GLW) LCD manufacturing division will also continue to be impacted.

In the second quarter of 2012, Corning announced that its "Display Technologies wholly owned business LCD glass volume declined by mid-single digits on a sequential basis and increased by mid-single digits year over year. Volume at Samsung Corning Precision Materials Co., Ltd. increased by the mid-single digits on a sequential basis, but declined by low-double digits from a year ago."

On the positive side, it also said that LCD price declines had moderated in the quarter, which could potentially be an early sign of price stabilization. Fortunately for Corning, it has seen some growth in its "Specialty Materials" sales which includes the popular "Gorilla Glass" products which are used in many tablets and mobile phones. That should help to offset some potential weakness in the television LCD business, however, the shares are now trading near the top of the recent trading range and could be poised for another drop when earnings are announced for the third quarter. When Corning announced Q2 earnings on July 25th, the stock was trading at about $12 per share and plunged nearly 10%, to around $11. With the stock trading at even higher levels now, investors may want to consider the risks of another repeat selloff when Corning reports financial results, later this month. At issue will be earnings, but also guidance which might be weak considering the challenges with many European consumers, and a slowdown in China and the U.S.

Key Data Points For Corning From Yahoo Finance:
Current Share Price: $13.40
52-Week Range: $10.62 to $15.75
Dividend: 30 cents which yields 2.3%
2012 Earnings Estimate: $1.28 per share
2013 Earnings Estimate: $1.43 per share
P/E Ratio: about 9 times earnings

Data is sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.

Disclosure: I am long GLW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long GLW but might sell my position before earnings.

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