This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Corning Glass Remains an 800-Pound Gorilla

Stocks in this article: GLW

As part of its plan, Corning will offer price-competitive Gorilla Glass products that will offer higher quality than the standard soda lime glass used today. In addition, Corning will use a China-specific branding campaign to market Gorilla Glass in the leading smartphone market in the world.

In addition to Gorilla Glass, Corning now owns Samsung Corning Precision Materials after buying out Samsung's 43% stake. This will add around $2 billion in annual sales to Corning's display technologies segment while operational synergies will result in $350 million incremental net profit after tax.

This transaction comes with a 10-year supply agreement, where Corning Precision Materials will provide glass substrates to Samsung's products. This agreement strengthens Corning's glass substrate manufacturing and safeguards Corning's interests against cyclical downturn.

Additionally, Corning will leverage its strong market position to benefit from increasing average screen size due to the adoption of large-sized screens on TVs, mobiles, notebooks, and tablets. The increase in average screen size positively impacted Corning's volume, with the company reporting year over year percentage volume improvements in the mid-twenties in fiscal year 2013. It grew by 10% year over year in 2013, and this growth momentum will sustain in 2014 as well.

Volume improvement helped Corning reduce the negative impact of the glass price dip. Furthermore, the company will benefit from operational synergies derived from this transaction. Corning will derive cost synergies from a combination of manufacturing assets and a reduction in its ongoing capital expenses.

Overall, Corning proves to be a long-term investment opportunity especially with the SCP transaction, which will add high incremental value to both its top line and bottom line. This transaction will also add strong shareholder value because as the free cash generated from this deal will be utilized for share repurchase. An incremental $2 billion in share repurchase will be executed as part of this deal.

In addition, Gorilla Glass will provide strong growth momentum to Corning's revenue in fiscal year 2014, with strong growth coming from new markets like automotive and touch notebooks.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Rohit Gupta works in investment banking, buy- and sell-side equity research and ops management.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,912.56 +107.76 0.61%
S&P 500 2,074.10 +3.45 0.17%
NASDAQ 4,776.0120 +10.6320 0.22%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs