Corning ( GLW) shares dipped on renewed worries over mounting flat-panel display inventories.
In an earnings warning Friday, 3M ( MMM), a leading supplier of film coatings for liquid crystal displays, blamed a glut of LCD TVs for much of its second-quarter woes. Spring is generally the most challenging season for TV sales. Consumer demand for TVs tends to slacken at a time when the year's new models pile up before last year's models can be cleared out, say analysts. Adding to the supply mess, says 3M, was overordering in anticipation of big TV sales during soccer's World Cup finals. "It appears the industry overestimated demand for LCD televisions in anticipation of the FIFA World Cup and has temporarily reduced production accordingly," says 3M CEO George Buckley, in a press release Friday. Evidence of an LCD glut has been growing . Last month, two major flat-panel makers, AU Optronics ( AUO) and LG Philips ( LPL), warned that soaring inventory and low prices would cause a drag on second-quarter results. In May, Corning cut its LCD volume forecast to a 5% sequential decline, citing surplus supply. Prior to that, the company was expecting as much as 5% volume growth for the second quarter. Corning left its financial targets unchanged though. The company will report earnings on July 25 and expects to post an adjusted profit of about 25 cents a share on $1.31 billion in sales. Analysts are looking for pro forma earnings of 25 cents on $1.32 billion in revenue, according to Reuters Research. Corning shares fell $1.01, or 4%, to $22.23 in late-morning trading Friday. The stock is down 23% from its high this year in April. Two retailers of flat-panel televisions, Best Buy ( BBY) and Circuit City ( CC), fell 2% on the 3M news.
Even though AT&T tried a last-minute bribe of promising 5,000 new U.S. jobs to help gain support for the deal, the Justice Department filed a complaint to fight the combination of the nation's No. 2 and No. 4 wireless carriers.