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Corning Says View Still Rosy

Despite weak guidance, the glassmaker says there aren't inventory or demand issues.

Corning (GLW) - Get Report tempered views on the hot LCD market with lower-than-expected guidance, but it saw no inventory pile-up or demand slump.

"We are anticipating being right on track where we thought we would be for the full year," says Kate Asback, Corning's vice president of finance.

But investors, who had been hoping for a blowout year for Corning's liquid crystal glass business, now are likely to

revive worries that the credit crunch may be dragging down consumer spending on luxury items like flat-screen TVs.

Shares of the Corning, N.Y., glassmaker fell 6% early Wednesday after the company reported strong third-quarter results but pegged fourth-quarter numbers

below Wall Street's targets. Corning expects to post adjusted earnings of 37 cents a share on about $1.5 billion in sales for the December quarter, while analysts had forecast a 39-cent profit on sales of $1.62 billion.

As a supplier to the flat-panel computer and TV manufacturers, Corning's LCD glass orders usually come three months before the finished products hit the stores, says Asback.

"The top of the cycle was earlier this year," she says.

Two factors may have limited the LCD growth this year, say analysts and industry watchers.

For one, Corning refused to cut prices as much as it had in previous years. The price of LCD glass fell 8% from year-ago levels, far less than the 20% price drop at the same time in 2006, says Asback.

The absence of a steep price cut may have prevented a big build-up of glass supply among manufacturers.

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But Asback, who expects to continue the price discipline plan next year, says the get tough pricing didn't play any role in the absence of a big upside surprise to glass volume levels.

"We are selling what we are making. I don't think our prices had impacted what our demand is," Asback says.

From her standpoint, the LCD market looks healthy for the remainder of this year and for 2008.

"Supply and demand is tight," says Asback. "We don't think there is any excess capacity in the industry."

Another likely governing factor on LCD volume was the production capacity among panel makers. Big makers of liquid crystal display panels -- such as

AU Optronics



LG Philips

(LPL) - Get Report

-- held back on expansion efforts last year and early this year.

Corning was down $1.49 to $23.25 in premarket trading Wednesday.