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Thinking of averaging up (just because there's nothing else out there that looks like a buy to me). Great long term investment, IMO
Hope everyone is well!
Corning sees Optical Communications segment growing twice as fast in FY14
February 7, 2014
09:30 EDT
Clark S. Kinlin, executive vice president, said that optical solutions will continue driving profitable growth for Corning's Optical Communications segment. He noted that the scale and rate of bandwidth growth-driven by video, wireless data, and cloud computing - are straining data centers and networks. "Optical-based solutions provide the most cost-effective capacity and speed to alleviate pressures on the network," Kinlin explained. He highlighted industry studies that show global IP traffic growing at 23% per year through 2017, with mobile traffic the fastest-growing component. "Our solid foundation of optical components is providing our customers with the necessary integrated solutions for today's growing variety of network applications," he added. Kinlin said that the company expects its Optical Communications segment to grow twice as fast as the overall industry in 2014.
http://www.theflyonthewall.com/permalinks/entry.php/GLWid1959925/GLW-Corning-sees-Glass-Technologies-adding-about-M-incremental-profit-this-year
Corning's core earnings were 29 cents per share.
Analysts on average had expected a profit of 27 cents per share on revenue of $1.93 billion, according to Thomson Reuters I/B/E/S.
They beat analyst estimates and it still goes down over a dollar! I can't believe people trade on headlines instead of what is actually going on with this company.
"We anticipate our price declines will return to more moderate levels after first quarter ...," Chief Financial Officer Jim Flaws said in an earnings call after the company reported better-than-expected quarter ended Dec. 31.
"If prices were to continue to decline like they are in first quarter, our competition would soon be incurring losses," he said.
Corning said it would still be profitable at even lowered prices as its costs are already lower than its competitors by a substantial percentage.
Great entry point IMO. This company isn't going anywhere. GLTA
I mean, Ford is talking about this fantasy solar car, but what they dont take into account is the glass panels- including the windshield, can be made into a solar panel with clarity.
Why arent we doing this with our skyscrapers?
That's funny I was thinking about curved TVs a long time ago!! Made complete sense. Better viewing angles. And if it was layered it would give more depth
Will be interesting to see if the CES show (in Las Vegas early January) hypes some of GLW's glass.
I know some manufacturers are showing curved and flexible TV's.
Do U think I can get this at $15/s if I wait?
Discussion @ UBS-Global-Technology-Conference - transcript of conf call
http://www.earningsimpact.com/Transcript/84625/GLW/Corning-Incorporated---UBS-Global-Technology-Conference
Corning Sees Future Free Cash Flow Enabling Added Share Repurchases
Nov 20, 2013 09:01:00 (ET)
Dow Jones Newswires (212-416-2800)
November 20, 2013 09:06 ET (14:06 GMT)
2014 is going to be a good year. The good thing is, the market isn't even near saturation. Got a good 5 years coming, at least.
Thanks - they needed a catalyst. $2 billion share buyback doesn't hurt, either!
Hey, Mkendra. Congrats on being invested in Corning at the right time.
You know, the new 52-week high came about only with the new deal with Samsung. But then, that's like saying you won only because you're faster.
Continued good luck.
Trueheart
Sorry. Looking good, long term. 2 year high today.
Corning ended the day #1 for percent gain on the NYSE and #14 for $ gain. And that's $0.54 under the high of day.
I'll take it!
Oh I'm noticing!!! Lol! Weeeeeeeeeee
WWWWOOOOWWW! what great news on Samsung!!! I've been waiting for this day or a long time!! Wanting to see Corning back over $100 a share at some point in the future. It's going to happen!
We should be in the top 10 (percent gainers) on the NYSE today ... and no one here noticing ... LOL!
Possibly #1 today?
Corning spikes to 2 year high after acquiring full ownership of SCP JV from Samsung;
authorizes $2 bln share repurchase
Here's a video of a new Dow Corning product a friend of mine (Kevin King featured in video) helped develop.
How Is Corning's Financial Condition Looking Today?
Oct 15 2013, 05:06 | 3 comments
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Before selecting a stock, there are a number of things that you need to consider in order to ensure that you are buying the stock of a high-quality company whose shares are poised to grow in value over time. Some of these concerns include what the company does, its competitive advantages, valuation, dividend payouts and sustainability, and earnings consistency.
Another important thing that you need to consider is the financial condition of the company in question. You want to know if the company is able to continue paying its bills, and how much debt it carries. The balance sheet is one of the most effective tools that you can use to evaluate a company's financial condition. In this article, I will discuss the balance sheet of Corning (GLW), in order to get some clues as to how well this company is doing.
I will go through the balance sheet, reviewing the most important items, in order to assess Corning's financial condition. The information that I am using for this article comes from the company's website here. Note that this article is not a comprehensive review as to whether Corning should be bought or sold, but rather, just an important piece of the puzzle when doing the proper due diligence.
This article might be a bit too basic for some and too long-winded for others, but I hope that some of you can derive benefit from it. More information on how I analyze financial statements can be found at my website here.
Background
Corning manufactures and sells specialty glass products, ceramics, and related materials around the world. Their operations are divided into five reportable segments. They are Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences.
Their Display Technologies segment accounted for 36% of the company's sales during 2012. This segment manufactures and sells liquid-crystal display (LCD) glass for flat panel displays. This segment features the company's 50% interest in Samsung Corning Precision Materials Ltd. Corning's business in this segment is pretty concentrated, as only four customers accounted for 93% of the revenue in this segment over the last six months.
The Telecommunications segment contributed 27% of Corning's revenue during 2012. This segment manufactures and sells optical fiber and cable, as well as hardware and equipment components for the telecom industry.
Corning's Environmental Technologies segment was responsible for 12% of the company's revenue over 2012. This segment manufactures ceramic substrates and filters for automotive and diesel applications. Over the last six months, just 3 customers accounted for 86% of this segment's sales.
The company's Specialty Materials segment produces products that provide more than 150 material formulations for glass, ceramics, and fluoride crystals in order to meet unique customer demands. This segment accounted for 17% of Corning's sales during 2012.
And, lastly, the Life Sciences segment produces glass and plastic labware, equipment, media, and reagents for use in scientific applications. This segment accounted for 8% of Corning's sales in 2012, with two customers accounting for 42% of the segment's sales over the last six months.
The company also has a 50% interest in Dow Corning, which is a U.S.-based producer of silicon products.
Cash and Cash Equivalents
The first line in the Assets column of the balance sheet is for the amount of cash and cash equivalents that the company has in its possession. Generally speaking, the more cash the better, as a company with a lot of cash can invest more in acquisitions, repurchase stock, pay down debt, and pay out dividends. Some people also value stocks according to their cash positions. Some of the larger and more mature companies tend not to carry a lot of cash on their balance sheets, as they might be more inclined to buy back stock with it, or pay out dividends.
As of June 30, 2013, Corning had $5.47B in cash and cash equivalents, which can be easily converted into cash. That is a lot of cash for a company that has a market capitalization of $21.1B. This means that the company trades at less than 4 times its cash position. This may make Corning an attractive play for value-minded investors. Over the last 12 months, Corning repurchased $566M worth of stock, and paid out $525M in dividends. The dividends and buybacks are well-supported by the company's trailing twelve-month free cash flow of $1.52B.
Net Receivables
Receivables constitute money that is owed to a company for products or services that have already been provided. Of course, the risk with having a lot of receivables is that some of your customers might end up not paying. For this reason, you usually like to see net receivables making up a relatively small percentage of the company's sales.
Corning had a total of $1.30B in net receivables on its most recent balance sheet, which represents 16.3% of its trailing 12-month sales of $7.98B. For fiscal 2012, 16.2% of its sales were booked as receivables, while that percentage was at 13.7% for fiscal 2011.
While this figure is high in absolute terms, it has been fairly consistent, and is more than likely reflective of the nature of the company's businesses. I don't see anything to be alarmed about here.
Current Ratio
Another factor that I like to look at is the current ratio. This helps to provide an idea as to whether or not the company can meet its short-term financial obligations in the event of a disruption of its operations. To calculate this ratio, you need the amount of current assets and the amount of current liabilities. Current assets are the assets of a company that are either cash or assets that can be converted into cash within the fiscal year. In addition to cash and short-term investments, some of these assets include inventory, accounts receivable, and prepaid expenses. Current liabilities are expenses that the company will have to pay within the fiscal year. These might include short-term debt and long-term debt that is maturing within the year, as well as accounts payable (money owed to suppliers and others in the normal course of business). Once you have these two figures, simply divide the amount of current assets by the amount of current liabilities to get your current ratio.
If a company's operations are disrupted due to a labor strike or a natural disaster, then the current assets will need to be used to pay for the current liabilities until the company's operations can get going again. For this reason, you generally like to see a current ratio of at least 1.0, although some like to see it as high as 1.5.
The current ratio of Corning is 5.66, which is fantastic.
Property, Plant and Equipment
Every company, regardless of the industry in which it operates, requires a certain amount of capital expenditure. Land has to be bought, factories have to be built, machinery has to be purchased, and so on. However, less may be more when it comes to outlays for property, plant and equipment, as companies that constantly have to upgrade and change their facilities to keep up with competition may be at a bit of a disadvantage.
However, another way of looking at it is that large amounts of money invested in this area may present a large barrier-to-entry for competitors. Right now, Corning has $9.95B worth of property, plant, and equipment on its balance sheet. This figure is slightly less than the $10.6B that the company reported at the end of fiscal 2012, and the $10.7B that it reported at the end of fiscal 2011. Of these assets, 70% is tied up in equipment. 24% is in buildings, while the remaining 6% is in construction in progress.
Goodwill
Goodwill is the price paid for an acquisition that's in excess of the acquired company's book value. The problem with a lot of goodwill on the balance sheet is that if the acquisition doesn't produce the value that was originally expected, then some of that goodwill might come off of the balance sheet, which could, in turn lead to the stock going downhill. Then again, acquisitions have to be judged on a case-by-case basis, as good companies are rarely purchased at or below book value.
Corning has $1B worth of goodwill on its most recent balance sheet, which is inline with the $974M worth of goodwill that it reported 6 months prior. It is higher than the $664M that was reported at the end of fiscal 2011. The increase in goodwill that occurred in 2012 is due to the company's $723M acquisition of Discovery Labware and Plasso Technologies Ltd. from Becton Dickinson, in an effort to bolster its Life Sciences division.
Usually, I don't like to see goodwill account for more than 20% of a company's total assets for the reason that I discussed at the beginning of this section. However, since goodwill only accounts for about 3.5% of Corning's total assets, I don't see anything to be concerned about here.
Intangible Assets
Intangible assets that are listed on the balance sheet include items such as licensed technology, patents, brand names, copyrights, and trademarks that have been purchased from someone else. They are listed on the balance sheet at their fair market values. Internally developed intangible assets do not go on the balance sheet in order to keep companies from artificially inflating their net worth by slapping any old fantasy valuation onto their assets. Many intangible assets like patents have finite lives, over which their values are amortized. This amortization goes as annual subtractions from assets on the balance sheet and as charges to the income statement. If the company that you are researching has intangible assets, with finite lives, that represent a very large part of its total asset base, then you need to be aware that with time, those assets are going to go away, resulting in a reduction in net worth, which may result in a reduction in share price, unless those intangible assets are replaced with other assets.
Corning currently has $558M worth of intangible assets on its balance sheet. This is inline with the $522B that it had 6 months prior, but higher than the $262M that the company reported at the end of fiscal 2011. The increase in intangible assets that occurred during 2012 was the result of the acquisition mentioned above, in the goodwill section. The company's intangible assets include patents, trademarks, trade names, and customer lists.
While the eventual loss of $558M from the balance sheet is not a good thing, considering that amount represents less than 2% of the company's total assets, I don't see anything to be alarmed about here, going forward.
Return on Assets
The return on assets is simply a measure of the efficiency in which management is using the company's assets. It tells you how much earnings management is generating for every dollar of assets at its disposal. For the most part, the higher, the better, although lower returns due to large asset totals can serve as effective barriers to entry for would-be competitors. The formula for calculating return on assets looks like this:
Return on Assets = (Net Income) / (Total Assets).
For Corning, the return on assets would be $1.93B in core earnings over the last 12 months, divided by $28.4B in total assets. This gives a return on assets for the trailing twelve months of 6.80%, which is decent. I also calculated Corning's returns on assets over fiscal years 2012, 2011 and 2010 for comparative purposes. This can be seen in the table below.
(click link for charts/tables)
Table 1: Declining Returns On Assets At Corning
Table 1 shows that returns on assets at Corning have been in decline over the last few years. This is due to declining earnings resulting mostly from volume and price declines in the company's Display Technologies segment due to oversupply. There has also been overcapacity in the solar industry that has led to lower prices and volumes in silicon products at Dow Corning.
Management is expecting these price declines to moderate in the Display Technologies segment, as well as positive sales growth in the company's other four segments to help turn things around.
Short-Term Debt Versus Long-Term Debt
In general, you don't want to invest in a company that has a large amount of short-term debt when compared to the company's long-term debt. If the company in question has an exorbitant amount of debt due in the coming year, then there may be questions as to whether the company is prepared to handle it.
Corning has just $72M worth of short-term debt, which is simply the current portion of the company's long-term debt. Given the company's cash position of almost $5.5B, and their free cash flow of $1.5B, they shouldn't have any problem in meeting this obligation.
Long-Term Debt
Long-term debt is debt that is due more than a year from now. An excessive amount of it can be crippling in some cases. For this reason, the less of it, the better. Companies that have sustainable competitive advantages in their fields usually don't need much debt in order to finance their operations. Their earnings are usually enough to take care of that. A company should generally be able to pay off its long-term debt with 3-4 years' worth of earnings.
Right now, Corning carries $2.82B of long-term debt. This figure is less than the $3.38B that was reported at the end of fiscal 2012, but more than the $2.36B that was reported at the end of fiscal 2011. The increase in 2012 is due to the fact that the company issued $750M of notes at 4.75%, with maturities in 2037 and 2042. Of the company's long-term debt, only about 10% of it is due within the next 5 years.
In determining how many years' worth of earnings it will take to pay off the long-term debt, I use the average of the company's core earnings over the last 3 fiscal years. The average core earnings of Corning over this period is $2.67B. When you divide the long-term debt by the average earnings of the company, here is what we find.
Years of Earnings to Pay off LT Debt = LT Debt / Average Earnings
For Corning, here is how it looks: $2.82B / $2.67B = 1.06 years
This is great for Corning, in that the company could pay off its long-term debt with just over one year's worth of earnings if it wanted to. For this reason, I don't see anything at all to worry about when it comes to Corning's long-term debt position.
Debt-To-Equity Ratio
The debt-to-equity ratio, as normally calculated, is simply the total liabilities divided by the amount of shareholder equity. The lower this number, the better. Companies with sustainable competitive advantages can finance most of their operations with their earnings power rather than by debt, giving many of them a lower debt-to-equity ratio. I usually like to see companies with this ratio below 1.0, although some raise the bar (or lower the bar if you're playing limbo) with a maximum of 0.8. Let's see how Corning stacks up here.
Debt-To-Equity Ratio = Total Liabilities / Shareholder Equity
For Corning, the debt-to-equity ratio is calculated by dividing its total liabilities of $6.94B by its shareholder equity of $21.4B. This yields a debt-to-equity ratio of 0.32.
This tells us that Corning is in very good shape with regard to its debt and equity positions.
The table below shows how the debt-to-equity ratio has changed over the last few years.
(click link for charts/tables)
Table 2: Debt-To-Equity Ratios Of Corning
From Table 2, we can see that Corning's debt is very manageable when compared to its equity position. The debt-to-equity ratio is well below 1.0, and has been very consistent over the last few years. I see nothing to worry about at this time with regard to Corning's debt and equity positions.
Tangible Book Value
Tangible book value is a measure of the company's tangible net worth when subtracting out the company's non-tangible assets, like its goodwill and intangible assets. It is calculated by subtracting the company's non-tangible assets and its liabilities from its total asset base. Corning, right now, has a tangible book value of $19.8B. Given that Corning currently has a market capitalization of $21.1B, the stock is currently trading at just a 6.5% premium to its tangible book value. When a stock trades at or below the company's tangible asset value, that means that you can acquire part of a company at just the cost of its hard assets (like buildings, equipment, land, etc.). You would practically be getting the company's intangible assets (like goodwill, patents, copyrights, etc.) and any earnings for free, providing that the company is making money. For this reason, you generally don't see well-known companies trading so close to their tangible book values. However, Corning is a rare example. This could be a very exciting proposition for value-oriented investors.
Return On Equity
Like the return on assets, the return on equity helps to give you an idea as to how efficient management is with the assets that it has at its disposal. It is calculated by using this formula.
Return On Equity = Net Income / Shareholder Equity
Generally speaking, the higher this figure, the better. However, it can be misleading, as management can juice this figure by taking on lots of debt, reducing the equity. This is why the return on equity should be used in conjunction with other metrics when determining whether a stock makes a good investment. Also, it should be mentioned that some companies are so profitable that they don't need to retain their earnings, so they buy back stock, reducing the equity, making the return on equity higher than it really should be. Some of these companies even have negative equity on account of buybacks. However, Corning is not one of these companies.
So, the return on equity for Corning is as follows:
$1.93B / $21.4B = 9.02%
While a solid return on equity, it isn't anything to write home about. In the table below, you can see how the return on equity has fared over the past three years.
Table 3: Returns On Equity At Corning
From Table 3, it can be seen that like the company's return on assets, the return on equity has been in decline. This is also due to the company's decline in earnings that was described in the return on assets section of this article.
Retained Earnings
Retained earnings are earnings that management chooses to reinvest into the company as opposed to paying it out to shareholders through dividends or buybacks. It is simply calculated as:
Retained Earnings = Net Income - Dividend Payments - Stock Buybacks
On the balance sheet, retained earnings is an accumulated number, as it adds up the retained earnings from every year. Growth in this area means that the net worth of the company is growing. You generally want to see a strong growth rate in this area, especially if you're dealing with a growth stock that doesn't pay much in dividends or buybacks. More mature companies, however, tend to have lower growth rates in this area, as they are more likely to pay out higher dividends.
Below, you can see how the retained earnings have fared at Corning at the ends of each of the last four fiscal years.
(click link for charts/tables)
Table 4: Retained Earnings At Corning
From the above table, you can see that Corning has an impressive retained earnings figure of $10.6B, and that the retained earnings have almost tripled since the end of 2009. This has been happening as the company has been buying back stock and paying dividends. While not necessarily a dividend growth champion, the company has increased its dividend in each of the last two years, signaling that perhaps, the company is going to start moving in this direction over the next few years.
Conclusion
After reviewing the most recent balance sheet, it can be concluded that there are a lot of things to like about the financial condition of Corning. For starters, Corning has a whopping $5.47B in cash, which is a lot for a company with a market cap that's just north of $20B. This cash position gives the company more flexibility when it comes to servicing debt, paying dividends, buying back stock, and reinvesting into the growth of the company. Corning also has a fantastic current ratio, which shows that the company has more than enough current assets on hand in order to meet its short-term obligations in the event that its operations encounter an unlikely disruption. The company's debt is also well under control, as can be seen by its consistently low debt-to-equity ratio and the fact that less than two years worth of earnings could cover its long-term debt. Retained earnings growth has also been excellent, leaving Corning with plenty of money to reinvest back into the company for more growth. I should also mention that Corning is currently trading at just a slight premium to its tangible book value, which is very rare for well-known companies.
At this time, the only concern that I have with Corning is the fact that its earnings have been in decline for some time now. This decline has led to declines in the company's returns on assets and equity. Investors should also keep in mind that four of the company's five divisions depend on just 2-4 customers for large chunks of their revenues. So, anyone who owns Corning stock should monitor the operations of the company's customers in order to get an idea of where Corning goes from here. However, with all of that said the declining trend in earnings should level off if the recovery in glass pricing and volumes takes hold like management expects it to. It is also worth noting that the company is working on new products, such as Willow Glass, which is an ultra-slim flexible glass substrate that can be used on electronic consumer products. If innovations such as these take off, then that could go a long way toward getting the company's returns on assets and equity back on track. An excellent article that goes into more detail about Corning's prospects can be found here.
While this is not a comprehensive review as to whether Corning should be bought or sold, I think that the company is in very good financial condition, with its manageable debt levels, economic moats, and solid cash position.
_______________________________________________________
http://seekingalpha.com/article/1745162-how-is-cornings-financial-condition-looking-today?source=email_rt_article_readmore
GLW
Post Unavailable
Corning's Opportunity Is In The Lack Of Risk
Oct 8 2013, 11:45 | 36 comments
Editor's notes: Corning has significant downside protection and still plenty of growth opportunities. Jeffrey Dow Jones peers in the looking glass and sees 50% upside.
As businesses go, Corning's (GLW) is about as boring as it gets. They make glass.
Yawn.
In fact, they're the world leader in specialty glass & ceramics. Yes, that includes stuff like LCD monitors, fiber-optic cables, and television displays.
I can see you yawning!
Listen up. Without spoiling too much of the punchline, Corning represents a positively asymmetric long-term bet. Every last investor already knows that the stock and its potential rewards are a little on the boring side, but the risk here is much smaller than a lot of people may realize. As a portfolio manager, I care very little about risk or return in an absolute sense. They're only meaningful when you relate them to one and another, and in the case of Corning, those characteristics get my blood pumpin'.
And if an esoteric reference to risk-adjusted returns didn't grab your attention, maybe this will: you know that virtually-indestructible glass on your iPhone? That's Corning. That's Gorilla Glass, which they've built into a $1 billion business in just a few short years. It's now the second most profitable line of business for Corning and it's the fastest growing product in their 160-year history. It now is included on over 1.5 billion devices worldwide, a new standard for the mobile computing industry. A few months ago, I heard their CEO on Bloomberg say they think this could be a $50 billion market someday. Think about that for a minute.
(click to enlarge)(click link below for charts/graphs)
They've also got something else really exciting going on that not a lot of people know about yet. Willow Glass. It's extremely lightweight "bendy glass" and it's exactly the kind of thing companies like Apple, Google, and Samsung need to create previously unimaginable types of displays. Forget about the iWatch or Google Glass. Imagine what you could do with thin, flexible displays in your home or on the dash of your car? What if you unrolled an iPad that was stored in a cylinder? In fact, Apple just patented a plan for a flexible iPhone.
Just when you thought there wasn't any innovation left to take place in the glass industry! I realize that nobody knows how this product will evolve and it'll be years before it generates sales that move the needle. But one would have said the exact same thing about Gorilla Glass back when they invented it in 2007.
"Wearable computing" is one of the industry's biggest buzzwords right now, and it's not too big a stretch to say that the entire growth trend depends to a certain degree on Corning's super-strong or super-flexible glass.
There really aren't many competitors, either. Apple and other manufacturers have experimented with sapphire displays, but haven't made a serious effort to change their production methodology.
Just over a decade ago, Corning was at the center of the tech universe as their glass fiber was being used as the backbone of digital communication all around the world. It sent their stock through the stratosphere as the planetary fiber rollout took hold. Today they could very well find themselves in a similar situation with Gorilla Glass and Willow Glass.
I noticed you stopped yawning.
The Fundamental Case
Corning's internal operations are a little awkward for investors to grasp. On the one hand, there's an established line of business that drives the bulk of their sales but that's also declining. The best-case long-term outcome for the displays segment is that it someday stabilizes and becomes a GDP business. There's also the segment that makes telecom fiber, and that's saddled with somewhat similar long-term prospects to the display segment. These two account for roughly two-thirds of sales revenue (and shrinking).
Then there's the specialty glass segment. This is where the growth is. Nobody knows how big this business is going to get, but when we look at the valuation metrics, it's possible that it may not matter. As long as it keeps growing a little bit, this segment is sorta like having a free call option.
As a whole, the growth picture isn't as bad as many may realize. Earnings are going to get bigger:
(click to enlarge)
If you're a value investor, Corning's ratios are fairly attractive across the board. Today the stock trades around 11x earnings and 6x cash flow. That's not quite the realm of ultra cheap, but in this context, I think that still qualifies as excellent value.
Here's why: Corning trades at merely 1x book value. Ordinarily you typically see ~1x book values when a company carries a lot of funky, difficult-to-price assets on its balance sheet or is saddled with a lot of debt. In the case of Corning, neither of those things are true. Their balance sheet is incredibly high quality, which means you get most of the intrinsic value of the business almost for free. Check it out...
Did you know this company carries over $6 billion of cash on its balance sheet? Yeah. Over 25% of Corning's $21 billion market cap is plain old cash. After that is around $12 billion of property, buildings, and equipment. They only carry around $3.3 billion of debt, the bulk of which isn't due for at least another 20 years and is financed at fairly reasonable rates (4-6%) and most of which was taken out to support the new Gorilla Glass and Willow Glass inventions.
The kicker is the $5 billion of "investments" that Corning reports on its balance sheet. This is 50% ownership of Samsung Corning Precision Materials, which is who makes the LCD monitors, and a 50% ownership of Dow Corning, which is who makes hundreds and hundreds of other boring products like adhesives, rubbers, and fluids, but also LED lights! We shouldn't laugh, because these businesses generated over $10 billion in sales for Corning, which is more than the $8 billion their actual operations generate! Typically, around 10-15% per year of those sales in these joint ventures ultimately get paid out as a dividend (net earnings) to Corning. But one of the reasons why Corning trades right around book value is because the market may disagree with Corning at just how much the investments in those subsidiaries are actually worth. There's no question this represents some risk, but again, most of that is already priced into the stock. Everybody knows that Samsung Corning Precision Materials (the LCD monitor business) is a slowly dying business and nobody understands that better than Corning themselves, which is why they're investing in these intriguing new types of glass displays.
So if you paid cash for the entire business today, you'd receive assets worth pretty close to what you paid. With $1.3 billion in sales, double digit top-line growth for the next few years, and 10% net margins that are also improving, the growth specialty-glass division would easily be worth $3+ billion if it stood on its own. So if you assume that the joint ventures are really worth a fraction of current book value, then the company is currently trading at what the cash, hard assets, and growth division is worth. You get everything else for free.
The market may think all those lines are worth zero, but that couldn't be further from the truth. This business still generates lots of cash, and at 6x cash flow, the total cash Corning generates would pay for itself before the end of this decade. Now you'd have all the assets and the business for free.
On a discounted cash flow basis, you really have to start bending your models to get any kind of price target that isn't 50-75% above the current stock price.
(click to enlarge)
Even assuming just a 3% growth rate and a 7% discount rate, the stock is fairly valued at these levels. As always, we should take DCF analysis with a grain of salt, but in this case, it supports our conclusion that it's highly likely that the business is fairly priced. The risk (volatility) lies to the upside.
Look, the more important point is that this business isn't going to go poof. It almost can't go bankrupt, barring some catastrophically bad decisions by management. And I'd submit that Corning's management has actually been top notch. As the display and telecom segments have become commoditized, they've been stepping up investment and research and creating new categories where they can grow. That's exactly what management is supposed to be doing. These guys have no intention of becoming BlackBerry.
Plus, they're getting incredibly shareholder friendly. Earlier this year they announced a $2 billion share repurchase program, which is impressive given that this is "only" a $21 billion company. When it's all said and done, that will be a 10% reduction in the number of shares outstanding.
(click to enlarge)
This repurchase program is on the heels of a 20% dividend increase at the end of last year and a 50% dividend increase in 2011. Dividends and buybacks are all the rage today, catnip for institutional investors and hedge fund managers alike. Yet still, investors are largely ignoring the stock.
After keeping that dividend constant for such a long time, you can see how serious they are now about the stock price. With a payout ratio of only 25%, management has more room to turn GLW into an income stock. 2.7% isn't quite in the realm of yield champions, but that's not to say it won't eventually join that tier. And, hey, it's on par with the 10yr Treasury. I'd much rather own Corning for the next 10 years than a newly-issued T-note.
It's amazing how much investor psychology has changed over the years. When I was coming of age as an investor during the dot-com bubble, there was outright revulsion for dividends and buybacks. Back then, the fad was for most companies to plow every last dollar into research & development or any other internal investment that boosted growth. These days, many companies literally cannot find productive ways to grow themselves. Cash simply accumulates on the balance sheet.
Dividend increases are always a good sign. Another imprint of growing up during the tech bubble and accounting scandals is that I am now hyper-skeptical of the way that things like earnings and sales are presented. Accounting today is a dark art, and there's a part of me that will never, ever trust it. That said, I do trust one thing: cash money. When it comes to fundamental analysis, my motto is "show me the money." Companies can't fake dividends and they can't fake buybacks. That stuff is real; you can touch it. So when somebody like Corning signals that they're going to increase the amount of cash they pay out to shareholders every quarter while at the same time buying back 10% of their own stock in the marketplace, I believe that whatever is happening over there is real.
The Technical Take
On the technical front, the key level to watch is 13.90. The stock has traded down there twice this summer and rallied successfully off both lows. If it does break 13.90, any technical analyst in the world would tell you that the $12-13 range would then be in play.
(click to enlarge)
I'm not convinced the stock will get there, though. This is why you do fundamental analysis alongside technical analysis. This business at $12-13 is almost stupidly cheap. Cheap enough that you might want to consider taking an outsized position in the company.
At present the stock is neither overbought nor oversold. If you're a momentum trader -- and really, who in their right mind is momentum trading Corning?! -- you should probably stay away. This is the domain of long-term investors only.
Along those lines:
(click to enlarge)
It's been a pretty darn depressing decade to have been a shareholder in Corning. In fact, the stock is trading today almost where it was 20 years ago! Who in their right mind wants to own that chart?
Look, you have to forget about past performance. This is what it looks like when a growth stock stops being a growth stock and instead is forced to grow actual earnings into its multiple. We've seen this with other "tech titan" stocks from the late 90s like Intel (INTC). It's not pretty buying a high P/E stock and then hanging on while that P/E comes down faster than the E component goes up.
But now that we know where our risk lies -- in the form of a very high fundamental floor and a technical foundation of solid support -- we know how and where to take a shot.
The Action Plan
Long term, I think the stock is a buy anywhere under $20, and a strong buy anywhere under $16. I'd get out in the mid $20s based on the confluence of several factors -- that's where technical resistance is, that's the range that the DCF models are showing, and that's a level where the market would be more appropriately valuing Corning's different lines of business.
Corning may not be the most exciting stock, but the risk/reward ratio right now is somewhat significantly and positively asymmetric. THAT'S EXCITING.
At these valuations, Corning is approaching the point where it can act as a robust store of capital with relatively minimal downside before hitting some sort of hard floor in the stock price because of the cash and real assets on the balance sheet. Yes, investing is about maximizing our gains, but it's also about preserving our capital, and for some strange reason, this latter endeavor gets short shrift at the individual stock level. For an individual stock, Corning is about as good a store of capital as it gets. Strategically speaking, this should be a stock that outperforms the S&P during a bear market, especially since one of the lessons we learned from the last recession is that mobile devices like iPhones and tablets are really consumer staples now, not discretionary luxuries. GLW is an incredibly handy tool for portfolio managers.
The relevance of Corning depends almost entirely on what you believe will happen to the specialty glass business. If you think that this is a legitimate growth opportunity - and for the record, I do - Corning could be an interesting and useful position in your portfolio given its small downside risk, low beta, and inexpensive growth option. The stock could go nowhere for a few more years giving you 2.7% while you wait and grow bored. Or the stock could steadily climb, and, if the specialty glass segment grew sufficiently large, the stock as a whole could command a 15-20x multiple. Don't laugh. It's been there before, under different circumstances, of course. But that's also a reminder that circumstances could always change again.
Depending on how much of Corning's former glory they can recapture or how much you buy into these new growth areas, that could be a $20-40 price for the stock. 20x at $2/share is definitely optimistic, but not as crazy as it sounds. Corning earned $3.37 a share back in the good ol' days of 2008. Even 15x at $1.50/share is $22.50, a full 50% higher than today's levels. You can see what sort of power a change in investor perception could have on a stock like this.
Don't forget that the buyback will goose earnings per share. Fewer shares means more earnings for each remaining share. Buybacks don't make Corning a better business, but they can make it a better stock. Some people care about that; some don't. I like that they're trying to make their stock more attractive, but only because the business is already in very good shape and not fully appreciated by the market.
In a sense, this company is the polar opposite of pre-IPO stock du jour, Twitter (TWTR). Twitter is all promise and a fundamental question mark. There's nothing sexy about Corning, and it promises nothing that will rock your world. But at least it doesn't carry the risk of going to zero and leaving you hung over, cooking breakfast by yourself.
I first wrote about Corning earlier in the year for my premium Alpine Advisor service. Since then the stock hasn't really gone anywhere. In fact, it hasn't performed anywhere near as well as my other picks. Today's analysis would be incomplete without some sort of examination into why. This is what I wrote back in May: "$16 is a key level. I doubt it has any trouble breaking through it again given all of the fundamental tailwinds present, though a pullback to $14.50 may be in the cards and could be seen on the first sight of micro- or macro-economic weakness."
I'm not sure what we're seeing here is pure fundamental weakness, but rather continued concern that the company has any sort of growth prospects whatsoever. This is probably the biggest risk in the stock right now, and it'll probably stay the biggest risk in the next 12-18 months. My timing was off in May, but this is a very long-term play and I think the short-term technical set up is even more favorable today. At the top level, with a multi-year investment horizon, most of the risks in Corning are perceptual and intangible rather than fundamental.
As a long-term investor, those are by far the easiest types of risks to live with.
Additional disclosure: See cornicecapital.com/AlpineAdvisor/legal-notice for additional disclosure.
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http://seekingalpha.com/article/1734392-cornings-opportunity-is-in-the-lack-of-risk?source=email_rt_article_readmore
GLW
Corning Is Not Monkeying Around
By John Del, Vecchio,
September 26, 2013
Corning (NYSE: GLW ) stands to benefit from increased sales of its well-known Gorilla Glass, as PC makers, including Apple and Dell, ramp up their use of the glass for touchscreen computers, tablets, and mobile handsets. Even if we leave iPad and Mac sales out of the equation, Apple is already using the glass in its mobile handsets (aka iPhones), and its recent introduction of lower priced versions of the iPhone line will only add to Corning's sales.
Corning says that the primary characteristics of this glass are its hardness and high scratch resistance, which allows Corning to use thinner glass in its applications without increasing fragility. A side benefit is that the glass is recyclable.
As of October 2012, over 1 billion mobile devices had Gorilla Glass installed. This number continues to rise, as manufacturers like Samsung use the glass in flat panel television screens, as well as in some of their high-end mobile devices. Available data indicates that 80% of smartphones shipped globally in the second quarter of 2013 were Android devices -- Samsung devices using Google's Android platform as the operating system. Early in 2013, Samsung predicted that it would sell as many as 500 million mobile devices, including 350 million handsets. If correct, the company will account for around 40% of all smartphone sales this year, with an expected 800-900 million sales. In all fairness, it should be pointed out that only a percentage of these devices will use the Gorilla Glass -- but its increased use paints a brighter future for Corning.
Revenue
(click link for charts/tables)
Source: Capital IQ.
Corning's year-over-year revenue growth comes in at a paltry 4%, but amounts to a 9% improvement from the previous year. Gorilla Glass and a newer, closely related product called Willow Glass are part of Corning's suite of products within its Specialty Materials Segment. This segment reported net sales of $301 million, or 1.7% better than the previous year same quarter. The company notes in its latest quarterly report that it has focused R&D efforts to advance new product attributes of the Gorilla Glass suite of products. Furthermore, it is also focusing on opportunities that will leverage existing materials, such as Willow Glass, for use in next-generation consumer electronics.
Net sales, however, don't tell the whole story: The Specialty Materials Segment's contribution to second quarter net income increased from 7.2% in 2012 to 11.6% this year.
Metric
(click link for charts/tables)
Source: Capital IQ.
Corning has improved its margins during the year, and has lowered its sales, general & administrative (SG&A) costs from 15% to 13% of revenue YoY. The company spends about 10% of revenue on R&D.
Cash flow
Corning also exhibits healthy operating cash flow. Last quarter operating cash flow was $395 million, and net income was $638 million. Net income was bumped up by an odd $251 million gain from currency exchange during the quarter. Ideally, we'd like to see higher operating cash than net income -- but currency translations are temporary in nature. If we back out this one item, it results in respectable earnings quality for the quarter.
GLW Inventories Chart
GLW Inventories data by YCharts.
Earnings quality
Over the last 8 quarters, Corning has used cash to reduce its share count by 110.7 million shares. This has greatly helped earnings per share (EPS), creating average gains of 17% over the last year and a YoY gain of 39%, reaching $0.43 per share last quarter.
Along with rising receivables and inventories, Days Sales Outstanding (DSO) has been creeping up quarterly to its current value of 60 days. While we like that Corning is paying its bills, higher receivables and DSO are a concern. Under most circumstances, a rising DSO indicates an attempt to pull revenue in the current quarter rather than in future quarters, and revenue is not growing as well as we'd like. While we have already said that demand for Gorilla Glass appears to be growing, we repeat that this glass is only one of many products that Corning sells.
At $1.24 billion, inventory has never been higher -- but the ratio of finished goods to raw materials is at a low point at 86%, and is significantly lower than last year's 142%. Days in inventory stands at 103 days, also higher than the year over year number of 83 days. The take away here is that Corning has added an abundant supply of raw materials to meet coming demand.
Valuation
Corning's valuation metrics deserve mention. The price-to-sales ratio has averaged 2.6x over the last 2 years, and price-to-cash flow from operations has averaged 6.1x. The company pays a healthy 2.7% dividend ($0.40 annually), and, at its current price of $15, it has a trailing 12 month P/E ratio of 11.6 and a forward P/E of 10.6, which is cheap relative to the broad market.
Street expectations
Consensus estimates for EPS for the coming quarter are $0.33 a share versus an estimate of $0.34 a year ago. Also, revenue for the 3rd quarter is estimated to be $2.1 billion, up 3% from $2.04 billion last year. Full year revenue is estimated to be $8.03 billion, up only 0.3% from last year. Given the 4% growth rate previously discussed, it should be relatively painless to meet the Street's consensus.
Foolish bottom line
Corning has a clear chance with its Gorilla Glass product to increase revenue and profitability in the coming years. Use of mobile handsets, flat panel televisions, and laptop computers will only continue to grow, and Corning appears to have cornered the market for these applications. As always, Foolish readers should base investment decisions on earnings quality. Given reasonable expectations and valuations, however, shares may offer a decent value.
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http://www.fool.com/investing/general/2013/09/26/corning-inc-this-company-is-not-monkeying-around.aspx
GLW
Gilford Securities Initiates Coverage on Corning (GLW)
Posted by Alphonse Anthony on Sep 23rd, 2013 // No Comments
Equities researchers at Gilford Securities assumed coverage on shares of Corning (NYSE:GLW) in a research report issued on Monday, American Banking and Market News reports. The firm set a “buy” rating and a $20.00 price target on the stock. Gilford Securities’ target price would suggest a potential upside of 36.33% from the stock’s previous close.
Shares of Corning (NYSE:GLW) opened at 14.67 on Monday. Corning has a 52-week low of $10.71 and a 52-week high of $16.43. The stock’s 50-day moving average is $14.71 and its 200-day moving average is $14.43. The company has a market cap of $21.424 billion and a price-to-earnings ratio of 11.39.
Corning (NYSE:GLW) last posted its quarterly earnings results on Tuesday, July 30th. The company reported $0.32 EPS for the quarter, beating the Thomson Reuters consensus estimate of $0.31 by $0.01. The company had revenue of $2.00 billion for the quarter, compared to the consensus estimate of $1.97 billion. During the same quarter in the prior year, the company posted $0.31 earnings per share. The company’s quarterly revenue was up 11.1% on a year-over-year basis. On average, analysts predict that Corning will post $1.27 earnings per share for the current fiscal year.
A number of other analysts have also recently weighed in on GLW. Analysts at Cantor Fitzgerald initiated coverage on shares of Corning (NYSE:GLW) in a research note to investors on Thursday. They set a “hold” rating and a $14.50 price target on the stock. Separately, analysts at Oppenheimer downgraded shares of Corning (NYSE:GLW) from an “outperform” rating to a “market perform” rating in a research note to investors on Tuesday, September 3rd. They now have a $18.00 price target on the stock. Finally, analysts at Piper Jaffray Cos. raised their price target on shares of Corning (NYSE:GLW) from $16.00 to $19.00 in a research note to investors on Thursday, August 1st. They now have an “overweight” rating on the stock.
Ten analysts have rated the stock with a hold rating and thirteen have issued a buy rating to the company’s stock. The company has an average rating of “Buy” and a consensus price target of $16.34.
Corning Incorporated (NYSE:GLW) is a global, technology-based corporation.
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http://zolmax.com/gilford-securities-initiates-coverage-on-corning-glw/111993/
GLW
Dow Corning offers more than 7,000 products.
Dow Corning is also the majority shareholder in the Hemlock Semiconductor Group (www.hscpoly.com) joint ventures, which includes Hemlock Semiconductor Corporation and Hemlock Semiconductor, L.L.C. Hemlock Semiconductor is a leading provider of polycrystalline silicon and other silicon-based products used in the manufacturing of semiconductor devices and solar cells and modules.
If You Are An Apple Lover, You Shouldn't Miss Corning
Sep 16 2013, 11:59
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Gorilla glass panels, revolutionary display glass panels, have seen demand growth due the boom in smartphone and tablet sales. As the name suggests, this glass is durable and provides scratch resistance features. Since its launch by Corning (GLW) in 2007, major smartphone and tablet manufacturers have used this glass as the display panel. To maintain its growth streak, the company is attempting to expand from smartphones and tablets to touch notebooks and markerboards.
Gorilla is out of the cage! Can it continue its bull run?
(click link for photos/charts)
Source: Company website
Corning, a world leader in specialty glass, launched Gorilla Glass NBT for touch enabled Notebooks on July 29, 2013. This type of glass provides 10 times more scratch resistance than glass previously used in devices. With annual sales surpassing $1 billion last year, this glass has been used by every major device manufacturer including Apple (AAPL), Samsung (SSNLF.PK), HTC, etc.
To continue its growth in device display glass, the company has entered the touch notebook market. These panels are expected to cost as low as 2% of the notebooks retail price, therefore manufacturers can use these glass panels without a major change in their cost. Dell is the first computer manufacturer to adopt this new glass in their upcoming touch notebook, and due to its cost effective advantages, more notebook manufacturers are expected to follow suit.
The touch notebook market is an emerging market with sales estimated to be around 10%-15% of the 188 million laptop sales in 2013, as per IDC. Therefore, at an estimation of 15%, 28 million touch notebooks will be shipped this year.
At an average price of $750 for each touch notebook, this glass panel will cost $15 per unit. Gorilla glass had achieved 20% cell phone market share from 2007-2010. Assuming that total touch enabled sales remain constant in the next year, then 20% market share new Gorilla glass NBT is expected to achieve revenue of $85 million in 2014. Gorilla glass has been adopted in 1.5 billion devices, and with adoption in touch notebooks, this figure is expected to rise.
Corning is also extending application of Gorilla glass to markerboards, or whiteboards. It has announced collaboration with major markerboard manufacturer Krystal Glass Writing Boards and Egan (EGAN) to position Gorilla glass as a markerboard surface, replacing traditional porcelain and soda lime board surfaces. The traditional markerboards have a short lifespan, are prone to stains, and are thick, which creates a double image when viewed from the side.
In contrast, Gorilla glass is scratch resistant, durable, and 88% thinner so it doesn't create visual distortion. The development of this Gorilla glass is in its initial stages, with early adoption by Egan in its EganAero markerboards. If the company successfully develops and markets this application then Corning can expect demand growth from markerboard manufacturers too.
Both these initiatives are just the beginning; the company plans to increase Gorilla glass application to automobiles, with BMW expected to use this glass in the rear window of its new hybrid i8 car. Expanded applications of Gorilla glass are expected to bring additional revenue from different industry verticals.
Can the raging Gorilla ever be caged?
Gorilla glass is a part of Corning's specialty material division and has been a star performer. This division witnessed 17% year-over-year revenue growth in the second quarter this year and contributed 14% of the company's total revenue for the first half of this year. The boom in smartphone and tablet sales, which increased 46.5% year over year and 59.6% year over year respectively in the second quarter of this year attributed to this revenue growth.
One of the major smartphone and tablet manufacturers, Apple, has been using Gorilla glass in its product line, most recently in the iPhone 5S and iPhone 5C. Corning can expect revenue growth potential from this new launch, as Apple is expected to increase its iPhone sales due to its new strategy of launching a cheaper product (i.e. iPhone 5C) for growing emerging smartphone markets. It launched these products in the U.S and China simultaneously, which signifies the importance of the Chinese market for Apple. China is the biggest smartphone market, and Apple commands just 4.6% market share as of July this year.
Looking at the growth potential in China, Apple has been in talks with the world biggest telecommunication company, China Mobile (CHL), to launch its new handset that supports China Mobile's current TD-SCDMA network 3G and the upcoming TD-LTE network for 4G. However, Apple made no announcement regarding an agreement with China Mobile during its product launch event. China Mobile has 138 million 3G users reported in June this year, so if Apple signs an agreement and grabs even a 10% market share in this subscriber base, it would result in additional sales of 13.8 million iPhones, and this figure excludes the potential 4G market.
Gorilla glass sales growth is expected to provide value to the investors in terms of earnings growth. Corning's 12 months forward P/E of 10.30, which is less than trailing 12 months P/E of 11.36, substantiates this growth. The stock is still undervalued which can be concluded from comparison with industry average of 16.9. Therefore, we feel that this stock has still upside potential.
Conclusion:
Expanding the application of Gorilla glass is expected to bring additional revenue from new markets like touch notebooks and markerboards. In addition, the launch of new iPhones is expected to increase the demand of Gorilla glass. Apple is expected to boost its iPhone sales from the expected collaboration with China Mobile for launch of a new compatible handset, furthering their demand for Gorilla glass.
Additional disclosure: Fusion Research is a team of equity analysts. This article was written by Rohit Gupta, one of our research analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.
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http://seekingalpha.com/article/1696332-if-you-are-an-apple-lover-you-shouldnt-miss-corning?source=email_rt_article_readmore
GLW
Corning : A Must Have For A Blue Chip Growth Portfolio
Sep 6 2013, 10:15 | 1 comment
Disclosure: I am long GLW. (More...)
Readers of my past articles would know a couple of things - firstly that I'm warming up to conglomerates and secondly that I've been a long-term proponent of Corning (GLW) as unfairly undervalued. Given that Corning is a conglomerate, let's put two and two together. Does it give you the traditional downside protection of a diversified conglomerate? And is it a buy? My answer to the first is no (in the short-term) and yes (in the long-term). As for is it a buy - we can quibble about the buy points, but there are few growth stocks with as much runway as GLW, an emphatic yes! So here's five points to keep in mind about GLW.
Market Diversity is long-term insurance, short-term is about glass. I like the fact that Corning is using its science competency (and acquisitive power) to create a presence in multiple industries. I'm especially fond of energy and life sciences. But let's be clear - the lion's share of profits in the near term are from glass (displays and optical fiber). There is a resurgence in the latter market as indicated by robust earnings from Ciena (CIEN) and Finisar (FNSR). And the former is up in the long-term with plenty of "excitement" in the interim. The point being, this is not a "low beta" conglomerate - but you'll sleep well if you focus on the long-term.
(Click to enlarge)(click link below for charts/tables)
Overblown Worries about China Subsidy. On the topic of "excitement" on the glass front - the near-term weakness in GLW comes from worries about Chinese government subsidies on display technologies, and its impact on inventory reduction. Corning management pointed out in the recent Citi Technology conference that they are prepared for the worst here, and would view any favorable action from the Chinese government as unexpected upside.
Historically Low Price-to-Sales (P/S). As a value investor, P/S is a good (and customary) metric to focus on. On that count, Corning is trading at close to the trough of its P/S range (see chart below). Corning's P/S also compares very favorably with other competitors in its market segment.
(Click to enlarge)
Robust Dividend Growth. Corning's dividend is at a satisfactory 2.8%. More importantly, it has more than doubled in the last three years (see below). At the recent Citi conference, James Flaws pointed out that their CapEx is likely to be lower over the next few years because of their aggressive capital investments over the last two. I take that very positively as a dividend investor.
(Click to enlarge)
The Touch Notebook Opportunity. The "crowd noise" around this isn't loud (enough) yet, but a visit to Best Buy would alert you to the extent of this transition. Note that while the unit volume of Notebooks may fall short of mobile devices, the amount of glass that goes into a notebook display is substantially larger.
These are some of the reasons I am looking to add to Corning, already a strong presence in my portfolio. As always, take this as input and do your own due diligence.
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http://seekingalpha.com/article/1677742-corning-a-must-have-for-a-blue-chip-growth-portfolio?source=email_rt_article_readmore
GLW
Corning Aims To Dominate Notebook Cover Glass Market With Gorilla Glass NBT
August 28th, 2013 by Trefis Team
Recently, Corning launched Gorilla Glass NBT as a cover glass for touchscreens on laptops.
Given the unique scratch and damage resistance that Gorilla Glass brings to touchscreens, the growth trend of touch on laptops will provide Corning with a new market to expand its Gorilla Glass sales.
Corning‘s (NYSE:GLW) Gorilla Glass is a market leading cover glass for smartphones and tablets that prevents the touchscreen of these devices from scratches and other damages from everyday use. Since its launch in 2007, sales of Gorilla Glass have risen sharply driven by its adoption on several smartphones and tablets to cross $1 billion in annual sales last year. Now, with the emergence of touch on laptops, there is a need for cover glass on touch-enabled laptops. To corner this emerging market, Corning recently launched Gorilla Glass NBT for cover glass application on laptop screens. This newly launched glass brings the scratch and other damage resistance benefits of Gorilla Glass to laptops and driven by the emerging trend of touch on laptops, this glass can drive the next stage of growth in Gorilla Glass’ sales in the coming years.
We currently have a stock price estimate of $15.50 for Corning, around 5% ahead of its current market price.
See our complete analysis of Corning here
Advantages Of Gorilla Glass NBT
Corning says that Gorilla Glass NBT offers 8 to 10 times higher scratch resistance than the standard soda-lime glass which is used in laptop screens. With the extensive gripping, tapping and swiping that comes with a touchscreen, the soda-lime glass screen is prone to breakage. The cost of replacing a broken laptop screen is also significant – upwards of a hundred dollars. Gorilla Glass NBT at 1%-2% of a laptop’s retail price can provide the additional damage resistance that is required for touchscreens. [1] Apart from scratch resistance, this cover glass also provides the laptop touchscreen with increased ability to withstand accidental bumps. This property prevents damage in case the laptop screen is closed on an object.
Gorilla Glass NBT Will Likely Drive Future Sales Growth
Dell has confirmed its plans to adopt the Gorilla Glass NBT on its touch-enabled laptops which it will launch this fall. Additionally, like in the case of smartphones and tablets, other manufacturers will likely follow suit given the cost-effective advantages that this cover glass offers to a touchscreen. Corning estimates that in the next few years the cover glass market for touch-enabled laptops has the potential to become as large as the one for smartphones and tablets. If this were to happen then the strong sales growth rates that we’ve seen for Gorilla Glass during the past five years will continue in the coming years. Gorilla Glass is a part of Corning’s Specialty Materials segment, which constituted 14% of its revenues in the first half of 2013. [2]
Additionally, this growth in sales from Gorilla Glass NBT will help Corning’s results, which have been impacted in recent quarters by LCD price declines. Last quarter, the company faced LCD price declines in the range of 2%-3% and in the current quarter it anticipates to face similar LCD price declines. Looking ahead, even though the company’s LCD business is moving towards stabilization, growth in its results will be driven by Gorilla Glass on rising unit sales of smartphones/tablets and the emerging trend of touch on laptops.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:
Corning Brings Gorilla® Glass NBT™ to Touch-Enabled Notebooks, July 29 2013, www.corning.com [?]
Corning’s Q2 2013 10-Q, July 31 2013, www.corning.com [?]
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http://www.trefis.com/stock/glw/articles/203285/corning-aims-to-dominate-notebook-cover-glass-market-with-gorilla-glass-nbt/2013-08-28
GLW
Ex-dividend date August 28. Payment date September 30, 2013.
Trueheart
Taiwan's Economic Daily News recently reported Apple is working with Foxconn and Corning (GLW +0.1%) on creating 55" and 60" TV sets (translation) sporting edge-to-edge Gorilla Glass panels.
GLW
Corning: Diversified And Discounted Value In An Expensive Market
Aug 9 2013, 01:56 | about: GLW (Corning Incorporated)
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLW over the next 72 hours. (More...)
With the recent surge in stock prices, investors have had to turn to unlikely places to find value. When I look at a company, no matter how good the pitch is, I hate putting my money into stocks that have triple digit P/E ratios. Corning Inc (GLW) offers investors a solid mix of value, diversity and growth at a sharply discounted price point; Corning offers an opportunity beaten by few others on the market.
The Financials
Corning's main selling point to me is simple, the company has a fortress balance sheet and solid financials at a low premium. With a price to book ratio of ~1.03 (~$14.75/s book value), the company is very undervalued. The book is made up of a solid mix of assets, with ~$3.75/s in cash and equivalents on hand. This is a very telling statistic, as it implies a degree of liquidity and a security cushion. There are few other companies trade at this price to cash multiple, and most are losing money fast. Corning has seen EPS drop over the last several years, however the company's earnings have hit a trough and bottomed out, providing a solid cash flow stream over the last few years and potential for growth in the coming quarters. While the company gives out a healthy ~2% dividend, the payout ratio is very low at about 23%. This implies a high ceiling for dividend growth, and the company has done exactly that, increasing it's dividend and buying back shares at a sharp rate over the last few years. Corning's financial metrics are very healthy, and they have been too heavily discounted at the current share price.
Diversification
Corning is different from many of the more popular tech and smartphone companies out there in that the company offers investors a solid degree of diversity. Indeed, Gorilla Glass is the company's flagship product, but the company is by no means a one trick pony. Gorilla Glass offers investors diversity in a hypersensitive smartphone market; while other companies numbers are at the whim of the consumer, Corning's are at the whim of the overall market. One need only look at the following list of devices that use Gorilla Glass for a snapshot of the company's diverse set of relationships. In addition, the company offers diversity outside of the smartphone market, where it derives almost two-thirds of it's income, with high growth in the life sciences segment as well as the telecom segment. The company is also making a push for future growth in the fiber optics field. The following is from the company's website:
"Our near-term growth will be fueled by three distinctly different market opportunities that showcase the depth of our materials expertise: LCD displays for communications and entertainment; emissions-control technology for light-, medium- and heavy-duty diesel vehicles; and optical fiber, cable, hardware and equipment for fiber-to-the-premises applications.
Corning is known for its unyielding commitment to research and development, its materials and process expertise and its tradition for life changing inventions. The company has been characterized as adaptive and flexible, and will continue to anticipate and drive major market opportunities...
According to our 2012 Annual Report, 36% of Corning's 2012 revenues came from our display technologies segment, 27% from our telecommunications segment, 12% from our environmental technologies segment, 17% from our specialty materials segment and 8% from our life sciences segment. Other products represented less than 1% of Corning sales."
Corning is a simple case of a company that has fallen by the wayside because of initial drops in EPS. This is a stock that screams value, and it is still an exceptionally profitable company that offers a solid yield with room for growth, trading at an insignificant discount to book value. The company offers investors all of the above and a piece of the upside in the smartphone market, however the diversified product offering limits the pain in the downside. Long term investors will be wise to pick up shares while the prices are cheap.
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http://seekingalpha.com/article/1622192-corning-diversified-and-discounted-value-in-an-expensive-market?source=google_news
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Corning Incorporated (NYSE:GLW) – Why Is It A Strong Buy?
by David Robertson - on Aug 5th 2013
Tomahawk, WI 8/05/2013 (Basicsmedia) –
The recent developments made in the business operations of the 163 year old glass maker, Corning Incorporated (NYSE:GLW) had proved to be highly attractive to the investors. There had been stronger reports on financial performance of 2Q2013, further supported by improved performance in the Specialty Materials segment and announcements on return of earnings to the shareholders which had all attracted the traders to the stock.
Results for second quarter 2013
For the financial results of 2Q2013, the glass maker had reported an increase of 4% in the net sales of its products over the previous year and had reported revenues to be at $1.98 billion which was in line with the consensus estimates of analysts. The earnings per share of Corning Inc. for the second quarter had been reported to have increased by 23% to touch $0.32 per share, marginally beating the analyst estimates by one cent per share.
Improved revenues for the business segments
The company had recently been continuing its upward march in financial performance with stronger results reported for the highly expected Specialty Materials division of the company. As earlier commented by the Chief Executive Officer of the company, Wendell Week, it appears that the business divisions of the glass maker are reaching greater heights, with 17% increase in sales for the Specialty Materials over the previous quarter. The net sales of $301 million for this business division had primarily been contributed by the increased efficiency in the manufacturing of Gorilla Glass, which had increased the earnings of the segment by 33% over the previous year.
Further, Corning Inc. had also reported stronger results for the Display Technologies segment where the revenues had grown by 21% to $670 million and the earnings had grown by 11% over the previous year. This increase in revenues and earnings for this division had primarily been attributed to the lower than expected decline in prices of LCD glass. In addition, the Telecommunications division had also reported an increase in net sales by 8% primarily owing to the recent acquisition of business contract from National Broadband Network and its build out in Australia.
New Additions to product lines
In addition to such increased revenues posted by major business segments of Corning Inc. it is also worth noting that the company had announced a new addition to its product portfolio. It had been reported that the new Gorilla Glass product, named to be Gorilla Glass NBT had already won the contract with Dell Inc. (NASDAQ:DELL) which had agreed to use this new product in its latest lineup of new products for the upcoming fall season.
Bottom line
In another move to surprise the shareholders, Corning Inc. had also announced that dividend would be paid to the shareholders at the rate of $0.10 per share for the 2Q2013 and that the share buyback program of the company would continue to move on at similar or higher levels for the next quarter. While the company had repurchased around $242 million worth shares in 2Q2013, it had also increased the dividend payment to its shareholders for the third time in the past 18 months.
With all such bright prospects to add on to the attraction of the stock of Corning Inc. and with the shares trading at just 13 times the earnings of the company, I would recommend that the shares of this glass maker prove to be highly attractive for a strong buy from the markets.
- See more at: http://basicsmedia.com/corning-incorporated-nyseglw-why-is-it-a-strong-buy-5082#sthash.ysf7vOMa.dpuf
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Lot is invested in it. Look at the range of customisable accessories:
http://www.pocket-lint.com/news/122694-moto-x-accessories-pictures-and-hands-on
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Lets hope Moto x sales are good. Others will follow if they are.
Thought there might be a little boost from the confirmation of GG in Motorola’s Moto X. Suppose everyone assumed it would be used and also too small a portion of Corning's revenue.
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Corning Price Target Raised to $19.00 at Piper Jaffray Cos. (GLW)
Posted by JAGS Staff on Aug 2nd, 2013
Corning Inc. logoEquities research analysts at Piper Jaffray Cos. raised their price objective on shares of Corning (NYSE:GLW) from $16.00 to $19.00 in a research note issued to investors on Thursday, AnalystRatingsNetwork reports. The firm currently has an “overweight” rating on the stock. Piper Jaffray Cos.’s price target would suggest a potential upside of 22.98% from the company’s current price.
Other equities research analysts have also recently issued reports about the stock. Analysts at Jefferies Group raised their price target on shares of Corning from $12.25 to $15.75 in a research note to investors on Thursday. They now have a “hold” rating on the stock. Separately, analysts at Barclays Capital reiterated an “overweight” rating on shares of Corning in a research note to investors on Wednesday. They now have a $20.00 price target on the stock. Finally, analysts at Zacks reiterated a “neutral” rating on shares of Corning in a research note to investors on Wednesday. They now have a $16.00 price target on the stock.
Nine investment analysts have rated the stock with a hold rating and thirteen have given a buy rating to the stock. The stock has an average rating of “Buy” and an average target price of $16.09.
Corning (NYSE:GLW) opened at 15.45 on Thursday. Corning has a 52-week low of $10.71 and a 52-week high of $16.43. The stock’s 50-day moving average is currently $14.81. The company has a market cap of $22.790 billion and a price-to-earnings ratio of 13.22.
Corning (NYSE:GLW) last issued its quarterly earnings data on Tuesday, July 30th. The company reported $0.32 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.31 by $0.01. The company had revenue of $2.00 billion for the quarter, compared to the consensus estimate of $1.97 billion. During the same quarter in the previous year, the company posted $0.31 earnings per share. The company’s revenue for the quarter was up 11.1% on a year-over-year basis. Analysts expect that Corning will post $1.28 EPS for the current fiscal year.
The company also recently declared a quarterly dividend, which is scheduled for Monday, September 30th. Investors of record on Friday, August 30th will be given a dividend of $0.10 per share. This represents a $0.40 dividend on an annualized basis and a yield of 2.59%. The ex-dividend date of this dividend is Wednesday, August 28th.
Corning Incorporated (NYSE:GLW) is a global, technology-based corporation.
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http://utahpeoplespost.com/2013/08/corning-price-target-raised-to-19-00-at-piper-jaffray-cos-glw/
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Corning Beats Analyst Estimates on EPS
by Seth Jayson, The Motley Fool Jul 31st 2013 1:01AM
Updated Jul 31st 2013 1:02AM
Corning (NYS: GLW) reported earnings on July 30. Here are the numbers you need to know.
The 10-second takeaway
For the quarter ended June 30 (Q2), Corning met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded. Non-GAAP earnings per share grew. GAAP earnings per share expanded significantly.
Margins expanded across the board.
Revenue details
Corning booked revenue of $1.98 billion. The 12 analysts polled by S&P Capital IQ hoped for revenue of $1.98 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS details
EPS came in at $0.32. The 15 earnings estimates compiled by S&P Capital IQ anticipated $0.31 per share. Non-GAAP EPS of $0.32 for Q2 were 3.2% higher than the prior-year quarter's $0.31 per share. GAAP EPS of $0.43 for Q2 were 43% higher than the prior-year quarter's $0.30 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
Margin details
For the quarter, gross margin was 44.6%, 280 basis points better than the prior-year quarter. Operating margin was 21.7%, 520 basis points better than the prior-year quarter. Net margin was 32.2%, 800 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Looking ahead
Next quarter's average estimate for revenue is $2.10 billion. On the bottom line, the average EPS estimate is $0.34.
Next year's average estimate for revenue is $8.07 billion. The average EPS estimate is $1.31.
Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 5,281 members out of 5,408 rating the stock outperform, and 127 members rating it underperform. Among 996 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 974 give Corning a green thumbs-up, and 22 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Corning is outperform, with an average price target of $15.65.
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http://www.dailyfinance.com/2013/07/31/corning-beats-analyst-estimates-on-eps/
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Corning's Q2 Shows Positive Trends - Analyst Blog
By Zacks.com, July 31, 2013, 10:22:41 AM EDT
Corning's ( GLW )second-quarter 2013 earnings beat the Zacks Consensus Estimate by a penny, or 3.2%%. Earnings have been adjusted for currency, pension-related accounting adjustments and other items net of tax.
Revenue
Corning reported revenue of $1.98 billion, which was up 9.3% sequentially and 3.9% year over year, roughly in line with our expectations.
Revenue by Segment
The Display Technologies segment generated around 32% of total revenue. The segment was down 2.9% sequentially and 1.6% year over year.
Samsung Precision ("SCP") LCD glass volumes were up low single-digits sequentially and flat with the year-ago quarter (better than guided). Volumes in the wholly-owned business were up mid-to-high single digits sequentially, but up 40% from the year-ago quarter (better than guided) Glass price declines continues to moderate as expected.
However, inventory in the channel and at retailers is on the rise, as the TV industry moves to larger screen sizes and moves to build initial stock levels.
Telecommunications (30% of revenue) grew 27.9% sequentially and 7.5% from the year-ago quarter. The sequential increase was much better than Corning's guidance of a 20% increase.
As expected, the NBN project ramp is Australia was the most significant driver of year-over-year growth, which was helped by growth in wireless, fiber & cable and data center projects in China and offset by softness in Europe. The sequential increase was fairly broad-based (FTTH in North America, fiber & cable in China and an acquisition in Brazil).
Management did not break down sales by category.
Specialty Materials generated 15% of revenue, up 16.7% sequentially and 15.2% year over year. Management was looking for a 15-20% sequential increase due to strength in touch-based notebooks and smartphones, so results were within the guided range. Gorilla Glass (GG) remains a primary revenue driver.
The Environmental Technologies segment generated 12% of revenue, flat sequentially and down 8.4% year over year. Revenue missed expectations of a slight sequential increase, with the heavy duty segment (trucks) pulling down segment performance. The light vehicle segment was up slightly, in line with expectations.
The Life Sciences business accounted for 11% of revenue. The business was up 5.8% sequentially and 35.2% from a year ago. Corning attributed the increase to contributions from the Discovery Labware acquisition, which closed on Oct 31.
Margins
The gross margin was 44.6%, up 210 bps from 42.4% reported in the previous quarter, up 220 bps from last year and 2 points better than guided. Management stated that gross margins continue to improve across all except the all-important Display business, which remains slightly impacted by price declines. However, the increasing demand, improved efficiencies especially in GG production and move to thinner glass remain positives for overall gross margin improvement.
The operating expenses of $486 million were up 9.5% sequentially and 2.3% year over year. But all expenses declined as a percentage of sales from both the previous and year-ago quarters. R&D declined 78 bps and 66 bps from the two periods, respectively, while SG&A declined 86 bps and 157 bps, respectively.
Net Income
Corning's pro forma net income was $469 million or 23.7% of sales compared to $445 million or 24.5% in the previous quarter and $388 million or 20.3% of sales in the year-ago quarter. The pro forma estimate excludes acquisition-related charges, asbestos litigation and other charges on a tax-adjusted basis in the last quarter.
Including these special items, the GAAP net income was $638 million ($0.43 per share), compared to $494 million ($0.33 per share) in the previous quarter and $474 million (0.31 per share) in the year-ago quarter.
Balance Sheet
Inventories were up 5.9% during the quarter, with inventory turns declining from 3.6X to 3.5X. DSOs were up from 55 to 63. Corning ended the quarter with $5.47 billion in cash and short term investments, down $304 million during the quarter. However, the company has a huge debt balance. Including long term liabilities and short term debt, the net cash position was just $61 million at the end of the quarter, down $230 million during the quarter.
Cash generated from operations was $395 million, of which $244 million was spent on capex, $106 million on acquisitions net of cash, $232 million on share repurchases and $147 million on dividends.
Guidance
Management stated that the third quarter would mark Corning's fourth straight quarter of year-over-year earnings growth. Moderating LCD price declines will help the Display business, while the other three segments will grow.
Management did not mention the expected growth in the Display business but stated that volumes in the wholly-owned and SCP businesses together would be flat to slightly up sequentially. Price declines are expected to be similar to the second quarter.
Telecom segment sales are expected to be up 20% year over year driven by FTTH demand in North America, Australia and Europe. The U.S. and China are expected to be up on an increased number of data center projects and Brazil is expected to be driven by the recent acquisition.
Specialty Materials revenue is expected to be up 10% on a sequential basis, driven by continued strength in GG. The new products, particularly GG NBT, which is being used by Dell ( DELL ) in their new product line, will help revenues.
Environmental segment sales are to be up slightly over the prior-year level, as a stronger heavy-duty diesel business in North America is supported by tighter regulations in Europe and China.
The Life Sciences business is expected to be up 40-45% year over year on account of the acquisition completed last year.
Corning expects the core gross margin to be up 1% sequentially. SG&A and R&D are expected to be up year over year as a percentage of sales.
Equity earnings from Dow Corning were lowered, with the company now expecting a sequential decline of 50% and year-over-year decline of 20% in its silicon business (both in Europe and China) due to competitive pressures. The tax rate for the core business is expected to be 16% and core earnings down 25% year over year (roughly 22 cents, which is well below the Zacks Consensus Estimate of 34 cents).
Our Take
Corning's second-quarter results were slightly better than expected. Since Display remains the largest contributor to its revenue, the steadier volumes and improving prices in this business are encouraging. Additionally, GG should see continued strength as we move through the year, as the company is well positioned at several major players in the smartphone and mobile computing segments and has some new products ramping in the back half of the year. With important product ramps in the telecom segment, recovery in the environmental markets and acquisition-driven growth in the life sciences segment, things look positive for Corning. However, Dow Corning will continue to weigh on the shares.
Read more: http://www.nasdaq.com/article/cornings-q2-shows-positive-trends-analyst-blog-cm262864#ixzz2aeEgobir
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Q2-2013-Earnings-Call transcript
very strong second quarter delivering third consecutive quarter of year-over-year double-digits EPS growth
http://www.earningsimpact.com/Transcript/82614/GLW/Corning-Incorporated---Q2-2013-Earnings-Call
Moto X Phone Features May Include ‘Magic Glass’ Display
By Lisa Eadicicco, LAPTOP Staff Writer | Jul 29, 2013 11:38 AM EDT
MotoXMagic
An onslaught of leaks and images have painted a fairly clear picture of Motorola’s Moto X smartphone, and the newest of the bunch suggests it may come with a “Magic Glass” display that wraps around the phone to create a seamless design.
The technology is said to be a strengthened sheet of Gorilla Glass that is molded to cover not only the device’s face but its sides as well. This glass is coated with a layer of polymer to withstand bumps and bruises, meaning that phones with this “Magic Glass” will be more durable than most of their competitors.
The specialty Gorilla Glass is meant to create a form factor that would be consistent throughout the device’s chassis, essentially resulting in a fluid design with a barely noticeable gap between the display, its sides and rear shell. The tip comes from former Android and Me chief Taylor Wimberly, who also revealed that the phone will feature a laminated aluminum material that keeps its frame strong while remaining thin and light.
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http://blog.laptopmag.com/moto-x-phone-features-display
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Corning's 2nd-Quarter Net Up 35% on Higher Sales, Lower Expenses
Jul 30, 2013 07:54:04 (ET)
Saabira Chaudhuri
Corning Inc.'s (GLW) second-quarter profit rose 35% as sales climbed and expenses dropped.
Shares rose 3.2% to $15.88 in recent premarket trading as the company beat analyst estimates by a penny and said it expects to log year-over-year earnings growth for the current quarter.
Corning, which relies on sales of LCD-TV glass for the bulk of its profits, has seen its exposure to the consumer-electronics market push down results in recent quarters, as soft demand depresses prices for TV sets and the components they use.
Tuesday, Corning noted that LCD glass price declines were moderate, and less than the prior quarter. It expects declines for the third quarter to also be moderate, and consistent with the second quarter.
Corning reported a profit of $638 million, or 43 cents a share, compared with a year-ago profit of $474 million, or 31 cents a share. Excluding one-time items, per-share earnings were 32 cents, which the company said is a 23% rise from the year ago.
Sales climbed 3.9% to $1.98 billion.
Analysts polled by Thomson Reuters were expecting a 31-cent per-share profit and $1.98 billion of sales.
Gross margin widened to 44.6% from 42.3% as input costs were flat.
Selling, general and administrative expenses fell 7%, while research, development and engineering expenses declined 3.2%.
Sales fell 1.6% to $631 million in the display-technologies segment, which contains the LCD TV glass operations.
The telecom unit reported a sales rise of 7.5% to $601 million.
Environmental-technologies logged an 8.4% sales decline to $228 million.
Specialty-materials sales rose 1.7%.
For the third quarter, Corning said it expects LCD glass volume to be consistent to up slightly when compared with the second quarter.
Nice to take quick look at Q1 highlights
First quarter sales for the corporation were 1.8 billion
http://www.earningsimpact.com/Transcript/79717/GLW/Corning-Incorporated---Q1-2013-Earnings-Call
Corning Inc. (GLW) Q2 Earnings Preview: Bullish Earnings - Bearish Guidance?
July 29, 2013 09:56 AM
(By Rich Bieglmeier) Corning Inc.
(GLW : 15.26, 0.01) expects to release second quarter financial results prior to the open of the NYSE on Tuesday, July 30, 2013. A conference call to discuss the results will be held on Tuesday, July 30 at 8:30 AM ET.
Wall Street anticipates GLW will earn $0.31 for the quarter. iStock expects the specialty glass maker to report earnings that will beat Wall Street's consensus number. The iEstimate is $0.42, a penny upside EPS surprise.
Corning Incorporated produces and sells specialty glasses, ceramics, and related materials worldwide. It operates through five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences.
The Gorilla-Glass maker has topped Wall Street's consensus estimate 13 of the last 16 quarters by an average of $0.04 or 10.28%. The three misses were limited to a penny. Despite its strong history of delivering a bullish surprise, Corning's shares have rallied eight times and corrected eight times in the three-days surrounding the last 16 quarterly checkups. On average, the stock gained 6.40% with a range of 1.8% to 12.50% for the ocho positive reactions. Meanwhile, minus 7.26 was the normal red reaction, maxing out with a 12.6% loss and minimum damage of -2.10%.
Option players were particularly aggressive last Friday on the bear side of GLW's earnings, especially in the August 15 contract. Overall, Friday's put volume outpaced call activity by 1.85 to 1. Almost all the put volume traded in the August 15 with 3,299 of the 3,686 put contracts traded on the day. Somebody is placing a hefty bet on the downside. To turn a profit, Corning would have to fall below $14.67 to be in the money based on the week's final ask price. While Friday favored bears, open interest tips the scales towards bulls by a margin of 2.35 calls per put.
Investors might think that the smartphone and tablet explosion would provide a tailwind for the company, but the screens are small compared to big screen TVs, which have had sluggish sales of late.
In fact, isuppli.com reports, "Weak Increase in TV Demand Spurs Larger-Than-Expected Glut of LCD Panels in Q3." This is the sort of stuff that leads to unwelcome guidance. Consider this from isuppli, "For their part, Chinese television makers are experiencing swelling inventories because of weaker-than-expected sales. The companies are likely to reduce their sales targets for 2013 and are trimming panel orders for the second half of the year." TV predictions adds, "A new study predicts that TV sales revenue will not decrease in 2013 despite a decline in overall set shipments." So, we worry about Q3 guidance.
Let's check GLW's most recent 10-Q to see if we find any evidence of rising inventory, and other relevant financial statement items. A check of the balance sheet does send up a red-flare on inventory as the line item increased 11.42% in Q1 compared to sales falling 5.52%. Revenue going down while inventory is going up = not good.
While not as concerning, iStock also doesn't like that cost of sales rose as a percent of revenue to 57.6% from 57% year-over-year. Rising costs and falling revenue = not good.
Overall: Corning Inc. (GLW) could deliver a bullish earnings surprise as our iEstimate suggests; however, sluggish large screen TV sales combined with rising inventory and cost as a percentage of sales could lead to soft guidance, which would make a put options trader happy somewhere.
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http://www.istockanalyst.com/finance/story/6513446/corning-inc-glw-q2-earnings-preview-bullish-earnings-bearish-guidance
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