Corning has a list on its website that names devices with Gorilla Glass, like the Samsung Galaxy S II, Sony Bravia TVs and the HTC Sensation, to name a few. Noticeably missing is any mention of Apple devices — Apple is notoriously secretive about their products and processes, but Gorilla Glass indeed protects the iPhone’s retina display. The Corning site says, “Your favorite device may include Gorilla Glass, even if you don’t see it listed.” Gorilla Glass can be found in 200 million devices, roughly 20% of the handsets in the world. It’s 20 times stiffer and 30 times harder than plastic, which explains its popularity in the CE world.

Corning has a median price target of $20 by 17 brokers and a high target of $25. The last up/downgrade activity was on Aug 9, 2011, when Ticonderoga upgraded the company from Sell to Neutral.

Jubak's Picks
Friday, October 14, 2011
Corning May Be Fragile Now, But…

A company gets my attention when it raises its dividend 50%, as Corning (GLW) did on October 6.

Especially when it combines that dividend increase with news of a $1.5 billion stock buyback. And even more especially when it adds in extremely clear guidance for investors to expect a 30% drop in sequential earnings per share because of a slowdown in its industry and some loss of market share. (Corning is a member of my long-term Jubak Picks 50 portfolio.)

I think the message from Corning’s management is extremely clear. They think that their company has a great long-term future (hence the dividend increase), that it seriously undervalued (hence the stock buyback), but that the near term is likely to be very rough (hence the negative guidance.)

Let’s take those three points one at a time, last to first, OK?

The Near-Term Slowdown
Corning now dominates the market for glass for LCD displays, with about a 50% market share. It hasn’t achieved that dominance by cutting prices, but by using a proprietary manufacturing process that makes it possible for the company to produce larger, thinner, and higher-quality glass than rivals such as Nippon Electric Glass.

Gross margins took a tumble in 2009, falling to 38.8%, before rebounding last year to the 46% level the company hit in 2007 and 2008.

But even dominant players take a hit when demand falls big time. And that’s what has happened to Corning in 2011.

Consumer demand for TVs and computer monitors has fallen enough so that even growing demand for the company’s Gorilla Glass in screens for smartphones and tablets hasn’t been able to fill the gap. (In the first half, Corning’s display sales fell by 4%. Revenues from Gorilla Glass go to the specialty materials unit, which accounts for about 14% of revenue.)

Wall Street analysts are now looking for Corning’s earnings to fall by 18.4% year-to-year in the September quarter to be reported on October 26. For all of 2011, Wall Street projects that earnings will fall by 13.3%.

Earnings, according to Wall Street anyway, will rebound in 2012 with 9.5% growth, as demand for consumer electronics strengthens.

That recovery in earnings growth doesn’t depend just on Corning’s display business, however. That unit makes up about 40% of Corning’s revenue.

Another 26% of revenues come from the telecommunications unit that produces optical fiber, cable assemblies, and fiber-optic components. That business showed signs of a pickup in the first half of 2011, with revenue climbing by 27%.

Another 13% of sales comes from the company’s environmental technologies unit, where increasing sales of diesel trucks and cars is driving demand for the company’s filters and substrates from auto and truck makers emphasizing clear diesel technologies as a way to increase fuel efficiency.

The Long-Term Future
The 50% increase in dividends (to 30 cents a year, from 20 cents) is the board of directors’ vote of confidence in the company’s long-term prospects.

I think investors should think of Corning as a technology company rather than as a glassmaker or a manufacturer of cable. In recent years, the company has spent about 8% of revenue on research and development—and the result is a revenue stream hitched to fast-growing technology products such as LCD displays, mobile devices, fiber optics, and clean diesels.

Over the last five years, earnings growth at Corning has averaged 20% a year. Wall Street projects earnings growth of 11% a year for the next five years. I think that’s low, but I’d take it because…

…This Is a Really Undervalued Stock
Wall Street projects 2012 earnings of $1.97 a share—on the October 13 close of $13.56, that works out to a forward price to earnings ratio of 6.9. That makes the stock a bargain if earnings do grow at just the 11% a year that Wall Street now estimates.

But the bargain doesn’t stop there. Book value for Corning is $13.40 a share, according to Morningstar—which means that at the October 13 close of $13.56, you’re paying just a bit above book for a price to book ratio of 1. (And we won’t even talk about the fact that Corning sat on $6.4 billion in cash at the end of the second quarter. That works out to about $4 a share in cash.)

I think the stock is cheap enough to buy here, but I also see a good chance that the stock will actually get cheaper over the next three to six months. The bottom of its 52-week range is $11.51.

Your call on when to buy or add to existing positions depends on your view of the global economy and the lasting power of the current bounce. If you want to play it very conservatively, buy a partial initial position here and add on with any weakness.

I think $17 a share is a reasonable 12-month target price.

Many consumers already own flat-screen TVs, which would seem bad news for a company that makes the glass for LCD monitors. But Corning also makes scratchproof glass, such as that found on smartphones -- and that business is booming, says Vijay Rakesh, a managing director at Sterne Agee. Corning's chief financial officer, James Flaws, bought more than $1 million worth of shares recently.

WAYNE, NJ (May 11, 2011) – Toys“R”Us, Inc. today announced plans to add the largest rooftop solar power installation in North America to its distribution center in Flanders, NJ. Staging for the system is currently underway and construction will conclude this summer. Upon completion, the 5.38 megawatt on-site solar mechanism will occupy 869,294 square feet and is estimated to generate 72 percent of the electrical needs for the Toys“R”Us®facility.

“The unprecedented scope of this project furthers our already strong commitment to sustainability in our operations,” said Jerry Storch, Chairman and CEO, Toys“R”Us, Inc. “New Jersey’s leadership in providing renewable, clean energy opportunities for companies has helped pave the way for an installation of this size and underscores the state as a champion for solar energy growth across North America.”

This solar power installation will cover nearly 70% of the distribution center’s 1,281,000-square-foot roof and will consist of more than 37,000 ultra lightweight UNI-SOLAR® brand photovoltaic solar panels, manufactured by United Solar, a wholly owned subsidiary of Energy Conversion Devices. Depending on weather conditions, the system is expected to produce approximately 6,362,000 kilowatt hours of electricity each year. Generating the same amount of electricity using non-renewable sources would result in the release of an estimated 4,387 metric tons of carbon dioxide, the equivalent emissions from 860 passenger vehicles or that of the electricity used to power 532 homes annually.

Product features
The "UNI-SOLAR" is flexible a-Si (Triple Junction) type PV module with following properties:

[Major properties]
Low initial cost
Much annual energy yield
Small generation efficiency degradation with long-term deterioration
PV modules with a reputation for safety
Low reflection
High installation ability with adhesive layer
No toxicity substances such as lead

The council will vote on a $51,480 contract with Huron Valley Electric to install solar electric and solar thermal systems at Fire Station No. 6, located near Briarwood Mall.

The contract would have the local company install an 8-kilowatt solar photovoltaic system and a solar domestic hot water system. The project is funded entirely by the city's Energy Efficiency and Conservation Block Grant from the U.S. Department of Energy.

The installation would start June 1 and be completed by the end of June. The solar electric system is expected to produce $1,000 annually in electricity and the solar hot water system is expected to meet 55 percent of the station's hot water needs, for an additional annual savings of $430. Electricity would be used to offset the fire station's electric use on sunny days.

The city is purchasing the photovoltaic collectors for the project separately from the construction contract with Huron Valley Electric. Andrew Brix, the city's energy programs manager, said in a memo that's because the manufacturer, Uni-Solar, has agreed to sell solar collectors at a greatly reduced cost to the city based on its Solar America Cities Partnership.

The Uni-Solar photovoltaic purchase will be brought to City Council under a separate resolution at a later date, Brix said.

"This new project is planned for the distribution center and warehouse of Jordache Enterprises in South Plainfield. Phase 1 of the two-phase project – installation of 400,000 square feet of the building-integretated solar laminates, with a generating capacity of 1.3 MW – will begin soon, and completion is expected this summer, according to Uni-Solar, maker of the thin-film material."

The most familiar view of solar power is the PV panel tilted into the sun. Very recently there has been a strong surge of new incarnations of PV that are showing promise to change that iconic view for residential and commercial rooftops. In particular, there have been recent announcements and products such as flexible PV rolls that can be applied to rooftops and have a low profile and are more aesthetic in appearance. The technology and market for this application of flexible substrates has been a long time in the making and certainly the leader - UniSolar - has been key in developing this particular segment. Now with the advent of higher efficiency thin films, in particular CIGS, this application appears poised to become a significant part of the overall solar PV picture show.

United Solar, a wholly owned subsidiary of Energy Conversion Devices, Inc. (ECD) (Nasdaq:ENER) and manufacturer of UNI-SOLAR® brand photovoltaic (PV) laminates, today announced that the National Renewable Energy Laboratory (NREL) has confirmed an initial 12% conversion efficiency of a large-area solar cell using UNI-SOLAR's proprietary Nano-Crystalline™ silicon. To date, this is the highest large-area cell efficiency confirmed by NREL for thin-film silicon PV technology.

United Solar has worked with NREL for more than two decades in the research and development of advanced thin-film PV technologies. "I am extremely impressed with United Solar's recent breakthrough in efficiency in thin-film silicon photovoltaics," said Dr. Ryne Raffaelle, Director of the National Center for Photovoltaics at NREL. "United Solar has been the unquestioned leader in their field and one of the few PV companies in the world that can offer a true building integrated photovoltaic product. I am very excited about our continued collaborations."

The record-setting cell efficiency with an area of 400 square centimeters was encapsulated in UNI-SOLAR's proprietary thin-film polymer. UNI-SOLAR's triple-junction technology incorporates Nano-Crystalline silicon layers on a flexible stainless steel substrate and increases the cell's efficiency by about 50%, relative to current UNI-SOLAR cells in production.

"This is a substantial milestone for our company as we continue to execute on the technology roadmap we communicated in 2010," said Dr. Subhendu Guha, Chairman of United Solar and Executive Vice President of Photovoltaic Technology, Energy Conversion Devices. "This world record efficiency was achieved under the U.S. Department of Energy's Solar America Initiative Program led by United Solar with participation from NREL and associated universities."

United Solar's technology roadmap takes this ground-breaking technology into commercial production in 2012. The technological advancement drives meaningful reductions in the cost of installing a UNI-SOLAR solar energy system and will reduce the cost of generating solar electricity by over 20%. Ultimately, the company expects to offer solar energy systems that are capable of providing electricity at a cost below the utility grid.

ECD Ovonics is divided into three parts, and has full or partial ownership of several other companies.[3]

* Energy Generation
o United Solar Ovonic Corp (100% owned): flexible photovoltaic laminates
o Ovonic Fuel Cell Company LLC (100% owned)
* Energy Storage
o Ovonic Hydrogen Systems LLC (100% owned)
o Ovonic Battery Company (91.4% owned by ECD, 8.6% Honda, Sanyo and Sanoh)
+ Rare Earth Ovonic Inner Mongolia (19% owned by Ovonic Battery, 50% by Chevron)
+ Cobasys (50% owned by Ovonic Battery)
* Information Technology
o Ovonic Media (100% owned)
o Ovonyx Inc. (39.5% owned by ECD)
+ Ovonic Cognitive Computer (95% owned by ECD, 5% by Ovonyx)

This Joint Venture Agreement (the "Agreement") is made this 28th day of November, 2010, by and between Alto Group Holdings, Inc. , a Nevada corporation, ("ALTO"), St. Watson Mining Company Mali SARL, a Mali corporation ("SWMCM"), and St. Watson Mining Company Ltd., a Sierra Leone lim ited company (“SWMC”).

EQUIPMENT. St. Watson Mining Company will contribute the following equipment:

a) Dredge Dx8
b) 100 Ton Wash plant
c) 30 Ton Wash plant
d) 75 Ton Wash plant
e) Knelson Concentrator
f) Diester Table
g) Work Vehicles 9
h) Assay Laboratory

The company is in the for the long term and its goal's to show production to its shareholders is anticipated in the 1st Quarter of 2011.

...by implementing a second dredge, of the same caliber, into our Sierra Leone projects.

LONDON—J.P. Morgan Chase & Co. said it will accept physical gold as collateral against securities lending and repurchase obligations, a move that reinforces the precious metal's allure as an alternative currency.

"It's solidifying a trend that gold is re-establishing its role as a monetary and financial asset," said Carlos Sanchez, associate director of research with New York commodities consultancy CPM Group.

Gold's recent rise to record levels has been fueled in part by fears that central banks, including the U.S. Federal Reserve, have been taking actions that could devalue their currencies.

The J.P. Morgan move follows similar moves by other ...

Hunter Adams, the brains behind The Street Sweeper (thestreetsweeper.org), helped launch the site last year, just eight years after federal prosecutors labeled him an associate of the Gambino crime family in New York. Adams, who was convicted for his role in a massive "pump and dump" scheme involving penny stocks, is still on federal probation for his crime.

So far, four companies have announced their intention to develop lithium projects in Chile: Li3 Energy, Lomiko Metals, Panamerican Lithium and Salares Lithium.

Veteran lithium geologist Ihor I. Kunasz, who is also presenting for TRU at the conference, says existing lithium players "have three times the lithium concentration and also reserves that dwarf any of the new players."

Lower prices and fierce competition through 2020 is bad news for new lithium project promoters, "who will find it impossible to compete against the distinctive natural cost advantage of brine-based lithium producers Chemetall-SCL, FMC and SQM," TRU Group's research has determined.

"In addition, SQM, by far the world's largest lithium supplier, has for many years re-injected excess lithium produced into the Salara de Atacama, adding to the lithium resource of the salar," Kunasz noted. Kunasz developed the original lithium reserve model at Atacama.

TRU advises existing lithium chemical producers have the in-ground reserves and ability to meet nearly all market requirements in the next decade, simply by expanding capacity.

I am on the way home from Vancouver where I attended and presented at the first Critical Metals Investment Symposium, produced by Cambridge House International Inc. It was time very well spent. The moderators, who also spoke, were John Kaiser and Dr. Michael Berry.

Something is critical if without it, a technology cannot be done, or cannot be done economically or efficiently. When such a definition is applied to the space of all metals, it narrows the list. It allows investors to focus on what’s necessary to the continuation and growth of our technological society, not just on what’s nice.

More important, such winnowing down exposes the fact that there are critical mines as well as critical materials.

For example, for the USA to be self-sufficient in critical rare-earth metals, it will be necessary for the Alaskan Bokan Mountain deposits of Ucore Rare Metals to be developed as quickly as possible, along with either Molycorp’s Mountain Pass mine and/or Rare Element Resources’ Bear Lodge property in Wyoming. Only in this way can the USA become self-sufficient in the critical rare earths in the near term.

Canada has little internal domestic demand for the rare earths, but it has or controls not only more deposits of rare earths than any other country, but also significant operational expertise in processing rare-earth ores to high-purity metals. Canada is now turning to the idea of becoming a supplier to the world of rare-earth metals. This would occur via supply-chain development and perhaps the vertical integration of some existing companies, already doing various aspects of the rare-earth supply chain, not necessarily in Canada but owned and/or operated by Canadian businesses.

Canadian companies furthest along, or already in operation in the rare-earth supply chain, include Avalon Rare Metals, Great Western Minerals Group (GWMG) and Neo Material Technologies. Companies that own rich deposits with good heavy REE values, include Matamec Explorations, Quest Rare Minerals and Stans Energy.

Markets trade on momentum and fads, as well as on fundamentals. Let the herd pass on over the cliff with regard to the general run of REE ventures out there. Stick with the above owners of the critical mines, because your lifestyle and quality of life depend on your doing so. China wants not a piece of the pie, but a whole new supply of baked goods. Natural resources take a long tome to discover and to bring into production. Demand for the REEs is increasing and may well be larger than supply shortly. At the Vancouver conference, a paper read on behalf of Dr. Zhanheng Chen, Academic Director of the Chinese Society for Rare Earths , noted that China may well be a net buyer of rare earths by 2015.

I apologize for not mentioning all of the companies also presenting at the Vancouver conference, but I wanted today to focus on critical mines for rare earths, because I think there isn’t enough awareness of this and there has to be. The REE supply chain has to be geographically diversified. If not, Chinese demand and Chinese control of the processing will simply send all of the newly produced material in North America and elsewhere to China, thus baptizing North America as a third-world raw-materials supplier. Wasn’t that how China started out, by the way?

Don’t send me any mail about Molycorp’s separation plant or Lynas’ processing facility to be built in Malaysia. Those are company-specific operations, and are a good start, but neither company has ever produced high-purity rare-earth metals in the type of commercial quantities required today, nor have they made battery or magnet alloys and compounds, nor made finished goods such as NiMH batteries and rare-earth permanent magnets before. The first consumer-product mass producer, to be vertically integrated in rare-earth-based end-use products, will in all likelihood be Toyota in 2013-14. I still believe that the first vertically integrated producer of rare-earth permanent-magnet alloys and forms, will be GWMG. Exactly like China, I think that GWMG will allocate its internal production of REEs to its own operations, so that it will be able to realize the highest value-added from the rare earths. If and when there’s a surplus, then GWMG will sell into the market. Note that if this happens for China, the “demand exceeds the supply” conspiracy theorists will say it’s a plan. GWMG’s plan is just good business, but, apparently, the same plan followed by China, Inc., will be a plot to control the sector.

In any case some REEs are going to be in more critical short supply than others, if this is not already the case, so some mines will be more critical than others.

Don’t say I didn’t warn you.

Disclosure: At the time of writing, Jack Lifton holds long stock positions in Ucore Rare Metals Inc. (TSX.V:UCU) and Great Western Minerals Group Ltd. (TSX.V:GWG). Jack also does ongoing paid consulting for Ucore.