Glut Fears Crack Corning

Corning (GLW Quote) gets a chilly season's greetings from glut-wary investors.

The maker of liquid-crystal display, or LCD, glass for computer monitors and flat panel TVs reiterated its fourth-quarter outlook Thursday. But shares of the big glassmaker dipped amid troubling signs from customers that may be facing a new inventory pile up.

Four of Taiwan's top LCD panel makers have now reported that November shipment volumes have fallen from October levels, says UBS analyst Nikos Theodosopolous in a research note Thursday. AU Optronics (AUO Quote), Chi-Mei, Chunghwa Picture Tubes and Hannstar, have collectively seen volumes drop 3.4% below expectations, Theodosopolous writes.

Looking ahead, AUO, one of Corning's biggest customers, cut its fourth-quarter volume growth projection to 30%-35% quarter over quarter, down from the 40% pace it originally expected. And the company said it would likely cut production by 10%.

As a supplier of LCD glass sheets to the flat-panel makers, Corning's fortunes tend to correspond with those of its customers -- though not always immediately, say analysts.

The concern, Theodosopolous writes, is that "the weaker panel shipments do suggest tighter inventory controls by panel makers and perhaps a weaker demand environment for monitors."

Corning stuck with its target of about 25% quarter-over-quarter volume growth in the current period.

But Theodosopolous, who has a neutral rating on Corning, sees some potential disappointment further ahead.