January 26, 2016 / 5:08 PM / 2 years ago

Corning expects LCD business to rebound from second quarter

(Reuters) - Corning Inc, which makes Gorilla Glass used in smartphones, said it expects a rebound in its business that sells to LCD makers from the second quarter as demand improves.

Shares of the company, which also reported better-than-expected quarterly revenue and profit, rose as much as 5.7 percent to $17.71 in morning trading on Tuesday.

“The combination of a healthier supply chain and market growth will lead to panel maker utilization increasing and all glass volume growing as the year progresses,” Chief Financial Officer Tony Tripeny said on an earnings call.

Tripeny said an improvement in end-market demand and an increase in average TV size will help boost growth for the better part of 2016.

However, the company warned that first quarter would be the weakest of 2016.

Corning said it expects moderate sequential price declines for LCD glass to continue in 2016. The company said the decline in glass prices in 2015 was the smallest in the past five years.

While Corning is best known for its Gorilla Glass, a hardy scratch-resistant glass used in smartphones including Apple Inc’s iPhones, a majority of its revenue comes from supplying glass used in making LCDs.

Revenue declined about 14.5 percent to $903 million in the display technologies business unit, its biggest, in the fourth quarter ended Dec. 31.

Corning said the LCD business was hurt in part due to weak TV demand in Europe and Latin America.

“We were impressed by the display results in the face of an industry inventory correction, with continued moderate pricing declines largely absorbing the negative impact of lower display industry utilization,” Stifel Nicolaus analysts wrote in a note.

Revenue declined in three of Corning’s five business units, rising only in its optical communications and environmental technologies divisions.

The company’s net income fell to $224 million, or 17 cents per share, in the three months ended December, from $988 million, or 70 cents per share, a year earlier.

Core profit, which excludes certain items, was 34 cents per share.

The company’s core net sales fell to $2.40 billion from $2.53 billion.

Analysts on average had expected a profit of 32 cents per share and revenue of $2.33 billion, according to Thomson Reuters I/B/E/S.

Corning’s shares, down 20.3 percent in 2015, last traded at $17.65.

Reporting By Lehar Maan in Bengaluru; Editing by Sriraj Kalluvila

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