NEW YORK (Reuters) - Corning Inc (GLW.N) posted lower-than-expected quarterly revenue on a sharp decline in sales at its most profitable display business, sending shares down 7 percent as global economic weakness made investors nervous about the rest of 2012.
While the maker of products as diverse as screens for televisions and smartphones forecast a moderating decline in glass prices and a sequential increase in liquid crystal display (LCD) sales in the current quarter, investors were not convinced.
“Corning did miss their second-quarter numbers,” said Darice Liu, an analyst for National Securities Corp, a broker-dealer investment bank. “While we’re going to see, according to guidance, a nice increase in LCD glass volumes as well as pricing declines being moderate (in the current quarter) a lot of folks are concerned on the macro effect on LCD TV sales.”
Overall revenue dropped to $1.91 billion from $2.01 billion. Analysts expected $2.02 billion, according to Thomson Reuters I/B/E/S.
For the second half of the year, the company is most concerned about demand in China, and is “not looking for robust unit sales” in Europe, Chief Financial Officer Jim Flaws told analysts on a conference call.
Second-quarter shipments were lower than expected to manufacturers of LCD screens used in products such as flat-screen televisions, Corning’s most important market.
“We think they’re taking very little risk at building any inventory” Flaws told Reuters.
Corning kept its estimate for full-year growth in industry television sales in the 3 percent to 5 percent range. While events like the London Olympics Games often boost TV sales, that may not be the case this year because many people bought flat screen TVs for the last Olympics.
“We’re not expecting as much of an impact from this Olympics as we saw in 2008 from the Chinese Olympics,” Flaws said.
Sales in Corning’s display unit fell 16 percent from the year-ago quarter to $641 million on what the company described as “moderate” glass price declines.
Corning’s profit fell to $462 million, or 30 cents per share, from $755 million, or 47 cents per share, in the year-ago quarter. However, excluding unusual items, earnings per share were 31 cents, in line with analyst estimates, according to Thomson Reuters I/B/E/S.
Flaws said the market for glass displays used in everything from televisions to smartphones would increase sequentially in the low-double-digit percentage range this quarter in line with typical seasonal trends.
“We expect LCD sales to be okay, up this year every place, except Japan,” Flaws said, noting Japan had unusually high TV sales in 2011. Flaws said cash flow for the year would be “quite strong” without giving details.
If the economic outlook should cause a further decline in demand, Flaws said the company would be ready to cut costs by trimming back employment and manufacturing operations.
Chief Executive Wendell Weeks said in a statement that Corning is concerned about economic weakness in Europe and China as it had “seen signs that the unsettled global economy impacted some of our businesses in the past quarter.”
Along with telecommunications and display, Corning’s environmental technologies segment faced a reduction in sales of light-duty filters for auto emission systems in the quarter.
Flaws said Corning’s telecommunications business grew 10 percent sequentially in the second quarter, compared with the company’s hope for 15 percent growth.
Corning shares fell 87 cents to $11.19 in morning trade on New York Stock Exchange. The stock is down more than 16 percent since late April, when it traded at $14.45.
Reporting by Sinead Carew; editing by Jeffrey Benkoe