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UPDATE 4-Corning warns on TV sales, shares fall
July 27, 2011 / 11:26 AM / 6 years ago

UPDATE 4-Corning warns on TV sales, shares fall

* EPS of 48 cents beats Street view 47 cents

* Lowers global forecast for glass

* TV manufacturers cut sales forecasts-exec

* Shares fall 6.5 percent (Adds new analyst comments)

By Liana B. Baker

NEW YORK, July 27 (Reuters) - Corning Inc (GLW.N) slashed its forecast for the glass market and warned that manufacturers including Sony Corp (6758.T) and Samsung (005930.KS) are worried about weak TV sales over the holiday season.

Corning shares fell nearly 7 percent as it joined other companies in the supply chain, such as ARM Holdings ARM.L and Texas Instruments TXN.N, in raising doubts about the health of the consumer electronics market. Corning makes the liquid crystal display glass used in flat-screen TVs, so it often has an early read on TV sales.

Corning’s finance chief Jim Flaws said consumer electronics manufacturers recognize “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 are all reducing their forecasts of what will be sold at retail,” Flaws said in an interview.

Consumers, he said, might be spending discretionary income on products other than TV sets or “perhaps just not spending their money at all.”

Earlier this week, 3M’s (MMM.N) chief executive also warned that with consumers spending less, there could be a contraction in the LCD TV market. [ID:nN1E76O0VJ]

While Corning makes glass used in telecommunications, life sciences and the auto industry, its LCD business makes the most profit. Prospects of depressed LCD sales weighed on its share price.

“LCD TVs are going through a secular slowdown and we’re only in the early stages, so it’s only going to get worse,” Ticonderoga Securities analyst Brian White said.

Corning lowered its forecast for worldwide glass demand to between 3.3 billion and 3.4 billion square feet this year from 3.5 billion to 3.7 billon square feet.

“The company’s LCD glass outlook is much weaker than our projections,” White said, adding Corning is forecasting the lowest growth rate for glass that he has ever seen. He has a “sell” rating on the stock.

Sales in Corning’s display technologies segment, which includes its LCD glass, fell 9 percent in the second quarter.

Corning lowered its forecast for Gorilla Glass, the scratch-free cover glass mostly used in smartphones and tablets. Corning had bet on TV manufacturers buying resistant product to use as a cover glass on TV screens.

But after only one manufacturer, Sony, signed on, Corning reduced its annual revenue forecast for Gorilla Glass by 20 percent.

In the second quarter, Corning reported a decline in second-quarter profit as it cut its glass prices. 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 an asbestos exposure case, the company reported adjusted earnings per share of 48 cents, beating analysts’ average estimates of 47 cents, according to Thomson Reuters I/B/E/S.

Sales rose by 17 percent to $2 billion, topping estimates.

Shares were down 6.3 percent at $16.21 on the New York Stock Exchange on Wednesday.

Reporting by Liana B. Baker; Editing by Lisa Von Ahn, Matthew Lewis and Gunna Dickson

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