Corning Inc posted worse-than-expected quarterly results and gave a weak forecast due to a significant fall in sales of glass for televisions and computer monitors, and said it would eliminate 4,900 j…
Corning Inc posted worse-than-expected quarterly results and gave a weak forecast due to a significant fall in sales of glass for televisions and computer monitors, and said it would eliminate 4,900 jobs to cut costs. The results showed that Corning, like many other large manufacturers, is struggling to find balance and plan for the future in a deteriorating economic environment where both consumers and corporations are curbing spending. “The economic conditions are making it difficult for us and many other companies to forecast with any degree of certainty”, chief financial officer James Flaws said on a conference call. “While the markets take time to recover, we will make ourselves leaner and more cost-effective while investing to expand our technology leadership”. Corning, which makes glass for flat-panel displays and fiber-optic cables, said 4Q 2008 net income fell to USD 249 million, or USD 0.16 a share, from USD 768 million, or USD 0.49 a share, a year earlier. Excluding special items, profit was USD 0.13 a share, down 70% from a year ago. One-time items included restructuring charges and a gain from an asbestos settlement. As the economy has declined, demand from manufacturers for liquid crystal displays in flat-panel televisions and computers has fallen. The slowdown has been particularly harsh among companies that assemble TVs and among Corning“s customers in Taiwan. As a result, revenue for Corning fell 30% to USD 1.1 billion in the 4Q 2008. “We experienced a significant momentum shift in many of our core businesses in the 4Q as the recession took hold”, Wendell Weeks, chairman and chief executive officer, said in a statement “As a result, we are adjusting our operations to reflect anticipated lower sales in 2009”. The specialty glass maker said it anticipates “a slow start to 2009”, with 1Q volume of display glass down 20% to 25%. “Supply chain adjustments compounded by retail sales uncertainty may mean it will take several quarters for Corning“s financial model to reach steady state”, RBC Capital markets analyst Mark Sue wrote in a note to clients. He added, however, that smaller inventories at panel makers and solid consumer demand for TVs may spur a rebound in the 2H 2009. Corning reiterated that it expects sales, gross margin and net income to be lower in the 1Q compared with the 4Q, with 1Q earnings per share at about break-even, excluding one-time items. Corning said it would cut 3,500 jobs, or about 13% of its workforce, by the end of 2009, and left the door open for more reductions if necessary. It said it is also cutting more than 1,400 temporary workers. Chief financial officer James Flaws said the job cuts would be in North America, Latin America and “heavily in Asia”. The restructuring moves will result in 1Q charges of USD 115 million to USD 165 million. The company hopes to save USD 150 million to USD 200 million as a result of the steps.