NEW YORK Corning Inc lowered its global forecast for the glass market and warned that manufacturers including Sony Corp and Samsung are cutting their TV sales forecasts as fewer consumers are expected to buy their sets this holiday, sending shares down nearly 7 percent.
Corning, which makes the LCD glass used in flat-screen TVs, echoed the sentiment of earnings reports this week from other companies in the supply chain, such as ARM Holdings and Texas Instruments. On Tuesday, 3M's chief executive warned of a contraction in the LCD TV market as people are spending less on consumer electronics.
Corning's finance chief Jim Flaws said in an interview that consumer electronics manufacturers are recognizing that "there is a sense that the economies around the world are not growing as fast as people had originally hoped."
"What you are seeing is the major TV brands like Sony, Samsung, LG all reducing their forecasts of what will be sold at retail. It is not by huge amounts but it is by an amount that is causing us and the rest of the supply chain to say there is going to be less volume in the back half of the year," Flaws said.
He added that consumers might be spending their discretionary income in areas other than televisions or "perhaps just not spending their money at all."
Corning lowered its forecast for the global glass market to between 3.3 billion and 3.4 billion square feet this year, versus previous expectations of 3.5 billion to 3.7 billon square feet. This forecast came in below Wall Street analysts' expectation.
"The company's LCD glass outlook is much weaker than our projections," said Ticonderoga Securities analyst Brian White in a research note. White has a "sell" rating on the stock.
On Wednesday, the company reported a lower second-quarter profit as it lowered its prices for glass. Net income fell to $755 million, or 47 cents per share, from $913 million or 58 cents per share, a year earlier.
Adjusted for litigation related to asbestos exposure in Pittsburgh, the company reported adjusted earnings per share of 48 cents, beating analysts' average estimates of 47 cents, according to Thomson Reuters analysts.
Net sales rose to $2.0 billion from $1.71 billion, topping analysts' estimates of $1.96 billion.
Shares were down 6.6 percent at $16.16 on the New York Stock Exchange on Wednesday morning.
(Reporting by Liana B. Baker; Editing by Lisa Von Ahn and Matthew Lewis)