Corning spies new markets as LCD market slows
NEW YORK (Reuters) - Corning Inc's (GLW.N) scratch-resistant Gorilla Glass for smartphones and tablets may soon find their way into cars now that the company is looking to expand into new markets.
Corning is on the prowl for fresh growth areas because demand for LCD panels, its main business, has slowed as consumers resist buying new flat-screen televisions. Existing players are cutting prices to compete in a weakening market.
In response, the 159-year-old Corning hopes to diversify its glass portfolio, CFO Jim Flaws told the Reuters Technology, Media and Telecommunications Summit on Tuesday.
"Even as the LCD's growth rate slows, the company has always reinvented itself and added new products," he said.
Some Wall Street analysts have been skeptical that Corning could sell Gorilla Glass -- super-tough, lightweight, but more expensive -- in enough volume to be a major revenue generator. It is currently a component in products such as Motorola's Atrix 4G and Acer's new Iconia computers.
The company's specialty materials segment, which includes Gorilla Glass, had sales of just $254 million in the first quarter, versus overall revenue of $1.92 billion .
Analysts such as Ticonderoga Securities' Brian White have said Corning needs to start selling the glass in larger amounts for devices such as TVs.
Flaws said it already has one TV customer -- Sony Corp (6758.T), which is using the glass in a line of Bravia TVs -- and that it is in talks with carmakers, which could put its glass in windows and sun roofs.
"We're working with some car manufacturers to see if Gorilla could be in a sun roof or perhaps the rear window because it's very strong but it's light and thin," the CFO said, adding that its light weight could help a car's gas mileage.
TESTING THE WATERS
Corning, which made the windows for some of the earliest spacecraft and invented Pyrex glass, has staked some of its reputation on the razor-thin, super-tough product.
It has launched an ad campaign, touted it on conference calls and made clear it expects the business to ramp up quickly. In 2010, it predicted sales of the glass could double to $800 million this year.
But with the likes of Japan's Asahi Glass (5201.T) saying in February it would spend $240 million on a new specialty furnace to take the U.S. company on, Corning is looking around for new clientele.
Flaws said Corning had sent prototypes to carmakers but would not say which.
"We don't have a customer yet but we're working with several car manufacturers to see if we can get them interested," he said.
Corning is also ramping up its telecommunications business, expecting "huge demand" for glass used to wire data centers. Glass for wireless equipment could be another growth area, Flaws said.
The CFO said Corning is now looking at buying companies that sell equipment to improve cellular coverage in buildings as well as equipment for wireless broadcast towers. Flaws noted that connecting cell towers was already a big business for Corning.
"We'd be interested in expanding our capability in wireless," he said. "We'd love to have more of a footprint (at the wireless tower)."
The last growth area that Corning sees is in glass used in thin-film photovoltaic cells used in solar panels. Flaws said Corning could have sales in this next year and that it will be opening a manufacturing plant to focus on it.
"We're hopeful we'll get a customer who will make solar cells out of our glass for next year," Flaws said.
(Additional reporting by Sinead Carew, Editing by Edwin Chan, Gary Hill)
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