ROCHESTER, N.Y. - Corning Inc. posted a 53 per cent slump in fourth-quarter profit Wednesday and said it is scaling back production of liquid-crystal-display glass because lacklustre demand for LCD televisions has led to a steep drop in glass prices.
Its stock fell almost 10 per cent, despite the assertion from Chief Financial Officer Jim Flaws that producing LCD glass remains "extraordinarily profitable."
The world's largest maker of LCD glass, Corning said it has had to cut its prices in recent months because Asian panel makers have excess supplies.
Corning hopes that by lowering its output it will help glass supplies "become balanced with glass demand at some point during the year," Flaws told analysts during a conference call.
Corning's net income fell to $491 million, or 31 cents per share, in the October-December period. That's down from $1.04 billion, or 66 cents per share, a year earlier. Excluding one-time items, it said it earned 33 cents a share. That matches the average forecast from Wall Street analysts, according to FactSet.
Revenue rose 7 per cent to $1.89 billion from $1.77 billion, lifted by a 4 per cent rise in sales of LCD glass, which totalled $780 million. That beat analysts' average expectation for revenue of $1.85 billion.
Flaws said "price declines would be significant" in the January-March quarter — as they were in the fourth quarter — and reach into double digits over the two quarters.
"We are hopeful that our pricing actions, combined with our capacity decisions, will help us get back to more stable price declines in the coming quarters," he said.
Corning shares fell $1.42, or 9.7 per cent, to $13.20 in afternoon trading. The stock has ranged from $11.51 to $23.43 in the past year.
Corning expects the retail market for LCD products to grow to 3.6 billion square feet in 2012 from about 3.2 billion square feet in 2011. Revenue from LCD glass rose 4.5 per cent to $3.1 billion last year, accounting for 40 per cent of overall sales.
DisplaySearch estimates that 206 million LCD-TVs were shipped worldwide in 2011, up 7.5 per cent from 2010, while shipments in North America fell 2 per cent to 37.5 million units.
In 2012, the market-research firm in Austin, Texas, projects a 9 per cent jump in global shipments to 225 million units, and a 3.7 per cent rise in North American shipments to 38.9 million units.
"With small but continuous improvements in the economic outlook ... there's better times ahead for the industry," said DisplaySearch analyst Paul Gagnon.
Environmental technologies revenue amounted to $238 million in the fourth quarter, in line with a year ago. Life-sciences revenue rose 2 per cent to $143 million, and telecommunications sales rose 11 per cent to $490 million.
Propelled by ultra-strong Gorilla glass used in handheld, tablet devices and upscale TVs with frameless monitors, Corning's specialty materials revenue swelled 21 per cent in the fourth quarter to $238 million. Invented in 1962, Gorilla found commercial use only in 2008 and sales surged to $710 million in 2011.
For all of 2011, Corning's revenue hit an all-time high of $7.9 billion, up 19 per cent from $6.6 billion in 2010. But its net income fell 21 per cent to $2.8 billion, or $1.77 a share, from $3.6 billion, or $2.25 per share, a year earlier.
Based in western New York, Corning employs 26,000 people. It also makes air-pollution filters for vehicles and industrial plants and is the world's largest producer of optical fiber and cable.
