Corning ( GLW) fell short of third-quarter revenue targets Wednesday and warned that sales could once again come up short in the fourth quarter.

The Corning, N.Y., glass and ceramics products maker said it had a profit of $768 million, or 49 cents a share, in the third quarter, up from $617 million, or 38 cents a share, in the year-ago period. Earnings were down 76% from the previous quarter, however.

In addition, third-quarter earnings included a $36 million gain related to the release of U.S. deferred tax asset valuation allowances. Excluding that special item, Corning had a profit of 46 cents a share.

Sales reached $1.56 billion in the quarter, even with the year-ago quarter but down 7.7% sequentially. Revenue slipped from the previous quarter as Corning's display technologies' glass volume increased a mere 2% year over year. The segment's sales topped $696 million, unchanged from the year-ago period but down 14% sequentially.

On average, analysts expected Corning to notch a profit of 44 cents a share, excluding items, on revenue of $1.59 billion, according to Thomson Reuters.

In September, Corning cut its third-quarter guidance, blaming a longer-than-expected supply chain correction for the reduction. At the time, Corning said it expected to post a profit of 43 cents a share to 45 cents a share.

A month later, CFO Jim Flaws reiterated that guidance at an investor conference but warned that economic conditions were creating uncertainty for its performance in 2009. Flaws also said there was a more pronounced shift in glass demand to Corning's equity venture.

"During the third quarter we experienced the impact of a supply chain correction in our display business," said CEO Wendell Weeks in a release Wednesday. "We believe that worsening economic conditions are now affecting retail demand for several of our businesses and that this economic decline may be accelerating in the fourth quarter."

Looking ahead, Corning expects fourth-quarter earnings to fall in a range of 20 cents to 28 cents a share, excluding items, on sales between $1.2 billion and $1.3 billion. That would fall short of Wall Street's expected earnings of 42 cents a share on revenue of $1.54 billion. Combined LCD glass volume is expected to be down in the range of 10% to 20% sequentially.

Corning was lately sliding $1.17, or 10.3%, to $10.25.