much watched liquid crystal display business got off to a modest start in the first quarter, but the glassmaker is still encouraged about a strong second half of 2005.
The LCD business grew 35% over year-ago levels, below the overall market growth of 40% to 60% Corning is predicting for 2005. But, in an interview Tuesday after the market closed, CFO Jim Flaws said the 35% growth was very much in line with the company's expectations.
"We had a good quarter in LCDs," said Flaws, adding that the drop in glass prices during the quarter didn't crack margins. Overall, Corning posted wider-than-expected margins of 41%, up from 35% in the fourth quarter ended in December.
Flaws said he was sticking with his forecast for LCD volume growth to be "north of 50%" in 2005. He also was encouraged by preliminary reports that show LCD TVs have reached an 8% penetration rate. That means LCDs make up 8 out of every 100 TVs sold worldwide.
One Corning fan cheered the bullish news on LCDs, saying it shows the technology is gaining traction with consumers.
Corning supplies the glass that is cut into panels for TVs and computer monitors. Skeptics say that while the techie fascination with LCD and high-definition TV pictures is there, that does not necessarily translate to consumer demand -- especially when the models are two and three times more expensive than conventional tube TVs.
Flaws says that with industry prices dropping, demand for TVs should be stronger toward the end of the year. Says Flaws: "The back half of 2005 will be an interesting time in LCD."