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Corning's glass sales rise, resisting trends
NEW YORK |
NEW YORK (Reuters) - Corning Inc (GLW.N) increased quarterly sales of glass used in the liquid crystal display screens found on TV sets, and showed its bet on creating a new scratch-resistant glass for smartphones has begun to pay off.
Corning's fourth-quarter results, which lifted its shares nearly 7 percent on Tuesday, benefited from its ability to buck weak trends in the LCD market.
As consumers have shown little appetite for upgrading their televisions after buying their first flat-screens sets, demand for LCD panels has slowed across the industry. The weaker market has led to price cuts among LCD glass makers.
But Corning's sales in the segment that includes LCD glass were up 5 percent at $750 million. Overall, revenue rose a better-than-expected 15 percent.
"The fact that Corning did better than (the market) suggests it was riding the right horses with the right products, or found another way to gain share from competitors," said Oppenheimer & Co analyst Yair Reiner.
Corning competes with LG Display Co Ltd (034220.KS) and Asahi Glass Co Ltd (5201.T).
Corning also showed that its bet on glass used in hot new products like smartphones is winning it more business. It saw a 79 percent increase in the segment that includes Gorilla Glass, the tough scratch-resistant thin glass that covers touchscreen devices such as Motorola Mobility MMI.N Droid phones and Samsung's(005930.KS) Galaxy Tab.
The company's chief financial officer, Jim Flaws, said in an interview that he expects the Gorilla Glass segment to increase by "three to four times" this year.
"Corning's other businesses are just starting to ramp up and are going to do a good job for them going forward," said Kendall Anderson of Anderson Griggs Portfolio Management, which has funds that hold Corning shares.
Anderson pointed to Corning's new fiber optics deal in Australia as an example of how the company is diversifying beyond its LCD business, which still makes up the bulk of its profit.
Last week, Corning inked a five-year $1.19 billion deal with Australia's state-owned National Broadband Network to supply fiber optics to a project that will provide 70 percent of the country's households with Internet service.
Corning expects its glass volume to increase in the mid-single digit percentage range next quarter. Glass price declines are expected to be more moderate than in the fourth quarter, the company said.
Gross margins should also improve this year, CFO Flaws said. "We expect margins to expand this year in basically every segment," he said.
In the quarter, gross margins improved to 46 percent from 39 percent a year earlier which Anderson, who owns Corning shares, said he considers to be under control.
Fourth-quarter net income rose to $1.044 billion, or 66 cents a share, up from $740 million, or 47 cents a share a year earlier.
Excluding gains from an insurance settlement related to an earthquake in Asia, the company's adjusted EPS was 46 cents, which narrowly missed consensus estimates on Wall Street of 47 cents, according to Thomson Reuters I/B/E/S.
But revenue of $1.77 billion surpassed expectations, with analysts on average expecting $1.61 billion for the quarter.
Corning shares were up 6.9 percent at $21 in afternoon trading on the New York Stock Exchange.
(Reporting by Liana B. Baker, editing by Dave Zimmerman and Derek Caney)
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