Corning (GLW) says it hit its targets for the year.Though the final 2006 numbers are not ready for release, Corning's financial performance was "within the range of guidance we issued," says vice president of finance Kate Asbeck, speaking at the Needham & Co. Growth Conference in New York. Corning's previous guidance called for earnings of 26 cents to 29 cents a share for the fourth quarter, on sales of around $1.33 billion. Analysts are looking for adjusted profit of 28 cents a share on $1.31 billion in revenue, according to Reuters Research. The big driver for Corning is the liquid crystal display glass unit, which reached a 50% growth rate over 2005 levels, and is on target with the company's guidance, says Asbeck. While display glass remained strong, sales of fiber optic cable and equipment to telcos were weak. For the fourth quarter, Corning's telecommunication sales fell about 25% or more from third-quarter levels, due to a seasonal slump and a slowdown in orders from customers like Verizon ( VZ), Asbeck said. And while the company saw dramatic price declines for its TV and flat-panel monitor glass, the impact was largely muted by cost cuts and higher volume. Asbeck said she expects 2006 gross margins will be "only slightly less" than 2005. Corning has predicted that its gross margin would be in the 45% range.
While fourth-quarter numbers were solid, analysts say Corning is facing a potential inventory pile-up in the first half of this year as TV makers try to scale back on production. The first
sign of slack in the supply chain came last month when four of Taiwan's biggest flat-panel makers reported a slowdown in shipments from October to November. Asbeck said she couldn't predict LCD inventory levels at this point since or provide any first-quarter volume outlook, but added that TV sales in January are typically the second- or third-highest of all the months in the year. But in February and March, sales drop off steeply, making the first quarter the weakest for TV sales overall. Corning shares rose 24 cents to $18.88 in midmorning trading Tuesday.