Corning Braces for Economic Uncertainty

Corning ( GLW) reiterated its third-quarter outlook Tuesday, although the company said that economic conditions are creating uncertainty for its performance in 2009.

The Corning, N.Y., glass and ceramics products maker said it still expects to post a profit in the third quarter of 43 cents a share to 45 cents a share, before special items. Analysts currently expect Corning to notch a 44-cent-a-share profit in the quarter, according to Thomson Reuters.

CFO Jim Flaws, addressing an investor conference in New York, said Corning's third-quarter glass volume shipments for the company's wholly owned business and its joint venture with Samsung -- Samsung Corning Precision Glass, or SCP -- grew a lower-than-expected 2% sequentially.

Flaws said there was a more pronounced shift in glass demand to Corning's equity venture. "SCP's volume was up 12% in the third quarter, while volume at Corning's wholly owned business was down 10%, which was lower than expected," he said. "Given this economic uncertainty, we are prepared to adjust our production capacity to match end market demand."

In September, Corning cut its third-quarter guidance, blaming a longer-than-expected supply chain correction for the reduction. Since revising its third-quarter outlook, analysts have reduced their earnings-per-share estimates by 2%.

While Flaws declined to provide guidance for the fourth quarter, he said Corning believes many Taiwanese panel makers could decide to continue to run at lower utilization rates for much of the fourth quarter.

"If this happens, we would not be surprised if volumes at our wholly owned business decline sequentially in the fourth quarter," Flaws said. "Regarding SCP, we believe their volumes could be higher if the Korean panel makers continue with their higher utilization rates."

"Looking ahead to 2009, the present economic turbulence creates significant uncertainty going forward," Flaws added. "Consequently, we are widening estimates for 2009 worldwide LCD glass market growth to 15% to 25%." The company's previous growth estimate was 20% to 25%.

Corning tumbled $1.24, or 8.9%, to $12.71. For the year, shares are down roughly 47%.

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