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Corning (GLW) - Get Corning Inc Report gave Wall Street a pleasant surprise Friday, forecasting a return to the black this fall after a long stretch of losses and layoffs.

The glass and optical parts maker said it expects to return to profitability in the third quarter, despite continued sales declines. Operating chief Wendall Weeks says the company is reaping the rewards of sales stability in its fiber-optic cable business and previous cost-cutting efforts.

It seems two years of plant closings and major restructurings have at last slowed the flow of red ink. Analysts hadn't seen Corning returning to the black in 2003. Investors took note, pushing the stock higher in

NYSE

-leading volume of 9 million shares by midday; Corning rose 19 cents to $4.39.

That said, the near-term outlook continues to be disheartening, if a bit less so than expected. Corning expects a first-quarter loss in the range of a penny to 4 cents per share, on about $715 million in revenue. That sales projection is 5% lower than the previous quarter and 20% below the year-ago period, as demand for telecom gear and fiber-optic cable remains weak.

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Wall Street had been looking for a first-quarter loss of 7 cents on $721 million in revenue.

With no significant upturn expected this year in the fiber-optic cable market, it's little wonder executives were talking up the strength of the company's glass-display business to investors Friday. Corning is a major supplier of computer screens and says it sees a considerable growth opportunity in the liquid crystal display, or LCD, used in TVs and PCs.

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Corning's decline

Investors, sensing that the company may have regained its financial footing, sent Corning shares up about 20 cents, or 5%, to $4.40 in late-morning trading Friday. Like its optical-component rival

JDS Uniphase

(JDSU)

, the company's stock has suffered a long slide, dropping more than 90% from the highs it reached in 2000 during the Net building boom.