August 2, 2010 by staff
Corning, (Stocks.Investopedia) — Corning (NYSE: GLW), the maker of glass for flat screen televisions, computers and screens of mobile devices, as well as the manufacturer of optical fiber and cable, revenues increased nearly 50% in the second quarter. The increase in sales for its thin devices using liquid crystal display (LCD) remained the largest producer of revenue for the company. While demand has been strong so far this year is not expected to maintain the same high rate.
The benefits of Crystal Clear
Revenues were 1.71 billion and for the quarter, compared with 1.4 billion and last year in Q2. LCD glass is most of Corning’s business, and the company has two thirds of the total LCD market. Its net income rose to 913 million, or 58 cents per share, and 611 million, or 39 cents per share. Corning Gorilla Glass, an ultra-thin, chemically hardened glass used in computer tablet and touch screen phones, and represented 125 million in sales. This number is expected to grow to $ 1 million next year, based on the potential of gorillas glass to be used in the television market.
Future technology: OLED display
Samsung, along with partner Universal Display (Nasdaq: PANLAR) has been experimenting with organic light-emitting diode display technology. This is different from Corning Gorilla Glass. OLED pixel works paste items in plastic instead of glass. Universal Display has already licensed this technology to LG Display (NYSE: LPL). The current use has been limited to small screens, such as SanDisk (NASDAQ: SNDK) or MP3 players (NYSE: NOK) Nokia cell phones, and a small Sony (NYSE: SNE) OLED TV. Although this technology can not be extended until a generation after the LCD, fewer investors want to know about it.
All major business divisions of Corning contributed to its strong quarter. The deal went like this: display, which includes the LCD panel, increased revenue by 23.9 percent over the previous year. The display segment represented 49 percent of total revenue. Telecommunications, including a fiber built in Canada, has increased only 0.9 percent year over year, but more than 21 percent sequentially. This segment is 26 percent of Corning’s revenue. The division of environmental technologies, including devices for pollution control of the car, was 39 percent over last year. Life sciences, 7 percent of revenue, also saw a substantial improvement. specialty materials, with Gorilla Glass division, saw sales jump 77.5 years percent over the year. The margins were slightly while capital expenditure (CAPEX) projects an increase of 1.2 billion and this year and $ 2 million in 2011. The high demand outside the United States, particularly in Asia, was a key factor to increase profits.
Corning Business Year Ahead
The demand for glass gorillas is expected to grow, while the main activity with the glass of the LCD panel is expected to be reduced temporarily. Retail demand for LCD TVs is strong in Asia, but there are concerns about domestic demand. Softer demand for PCs as well as the accumulation of inventories of LCD panels, we could mitigate future income. This decline, combined with the strong commitment of capital expenditure, the investment community has at least taking note that the image of Corning future income is not without caution.
For fundamental investors, the warnings about Corning are important. Although the company has performed brilliantly so far this year, concerns about the potential demand is real smooth. Corning may already have had their best quarters of the year. With its strong focus on the business segment display, LCD panels, investors should realize how Corning’s income depends on that market. Over the years, Corning has grown from a traditional glass company, to become a supplier of optical fiber, and is now the dominant manufacturer of LCD, so its management has been adapted. However, despite the sale of shares at a low P / E, we should at least wait to see earnings look better sustained for several more quarters.
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