A liquid crystal display inventory correction is taking the shine off Corning ( GLW).

Shares dropped 11% late Tuesday after the company posted soft second-quarter sales and offered wan sales guidance for the rest of the year.

The Corning, N.Y., glass maker said it made $514 million, or 32 cents a share, on sales of $1.26 billion. Excluding one-time items, the company says adjusted profit was $421 million, or 26 cents a share.

Those numbers compares with adjusted profit of 20 cents a share on $1.14 billion in sales in the year-ago period. Analysts were looking for pro forma earnings of 25 cents on $1.32 billion in revenue, according to Thomson First Call.

Looking ahead, Corning says adjusted profit will be about 24 cents a share and sales will be about $1.3 billion in the third quarter, well below the 28 cent profit on sales of $1.4 billion, or 6% sequential revenue growth, analysts were expecting.

Sales in Corning's much watched LCD business dropped 6% from first quarter levels. Net income for the display business was $344 million, down 18% from $417 million last quarter, but up 20% versus the second quarter of 2005.

"The story was the panel inventory correction," says Kate Asbeck, Corning's vice president of finance, in an interview after the earnings release Tuesday.

"We were pretty pleased with the earnings per share at the high end of the range," says Asbeck. The fact that "telecom was strong" helped offset the LCD drag on performance, she says.

Corning now sees total 2006 LCD volume growth somewhere in a range between 40% to 50%. That is down from the greater than 50% the company had previously forecast.

"With the uncertainty in the market and the relative pace of the recovery of our customer, it's hard to say with certainty we would grow better than the market," says Asbeck.

Corning shares fell 11% to $19.45 in post-market trading Tuesday.