Corning stock (ticker: GLW) experienced a significant decrease in value on Tuesday following the release of their disappointing September quarter results. The specialty glass manufacturer reported weaker-than-expected performance and provided guidance that fell short of Street estimates.
Decrease in Primary Business Segments
The company continues to face challenges across its primary business segments, particularly in the areas of glass for large-screen televisions and fiberoptic-communications infrastructure. This has contributed to the decline in Corning stock.
Third Quarter Performance
In the third quarter, Corning achieved “core” sales of $3.5 billion, meeting estimates. However, this figure represents a 1% sequential decrease and a 6% decrease from the same period last year. Under generally accepted accounting principles, sales were $3.2 billion, down 9%. Adjusted profits stood at 45 cents per share, falling two pennies below the Street consensus and matching the second-quarter level. The company’s guidance had anticipated a slight improvement on a sequential basis, which did not come to fruition. On a GAAP basis, Corning earned 19 cents a share.
Despite the challenges faced in the September quarter, Corning remains committed to overcoming these obstacles and striving for improved performance in the future.
Corning Anticipates Sales Recovery and Growth
Corning, a leading technology company, remains optimistic despite current market challenges. CEO Wendell Weeks stated that although demand is currently below trend lines, the company is confident that sales will recover and they will return to growth. In the meantime, Corning focuses on improving profitability and cash flow, even in the current sales environment. This strategy will position them to serve their markets more effectively when demand returns to normal levels.
Projections for the Fourth Quarter
Corning has projected core sales of $3.25 billion for the fourth quarter. However, the anticipated core earnings per share of 37 to 42 cents falls short of the Street consensus at 50 cents. These projections reflect the current market conditions but also indicate the company’s determination to overcome challenges and regain momentum.
Segment Performance Analysis
Sales in Corning’s optical-communications segment saw a significant decline of 30% sequentially, which can be attributed to lower order rates from carriers. This trend aligns with recent results from other suppliers in the telecommunications industry. On the other hand, the company’s display-tech sales, primarily TV-display glass, experienced a positive growth of 42% compared to the previous year, reaching $972 million. However, the volume of sales was lower than anticipated.
Moreover, Corning’s specialty materials segment, including smartphone cover glass, witnessed an 8% increase in sales, amounting to $563 million. This growth was primarily due to higher sales of Gorilla Glass, fueled by successful customer product launches during the quarter. It is worth mentioning that one of these product launches includes the Apple (AAPL) iPhone 15.
As Corning navigates through the current challenges, they focus on leveraging their existing capacity and capabilities to maximize profitability and generate significant incremental cash flow. The company remains committed to serving their markets effectively and anticipates a bright future ahead.
Company Performance Overview
Environmental-tech Business
The company’s environmental-tech business reported a significant growth in sales, reaching $449 million, which represents a 6% increase compared to the previous period.
Life Sciences
On the other hand, the company faced a decline in its life sciences sector, with sales dropping by 26% to $230 million. This reduction can primarily be attributed to lower demand for Covid-related products in China and customers drawing down inventory.