Corning Lowers Q4’08 Outlook

On November 18, 2008, Corning lowered its outlook for Q4’08 and 2009 due to evaporating demand for LCD goods such as LCD monitors and LCD TVs. CFO James Flaws stated that demand for LCD glass has dropped considerably more than what the company expected just a few weeks ago. LCD panel producers have responded rather quickly to decreasing demand at the retail level for LCD TVs. Decreased utilization rates at LCD fabs have a direct impact on the demand for LCD glass.

Corning expects Q4’08 sales to be less than the US$1.1 to $1.2 billion that was forecasted just in October. The company plans to make further cuts in LCD glass manufacturing. A reduction in capacity does not necessarily lead to profit margin compressions as Mr. Flaws stated. As long as the supply and demand is balanced there should be little pressure for price reductions. However if there is an inventory problem where there is considerably more supply than demand, that’s when pressure to drop prices for LCD glass will materialize. Corning will also reduce capital spending to expand capacity in 2009.

Corning has a dominant position in the LCD glass manufacturing market with about a 60% market share based on production capacity. The company has a joint venture between Samsung called Samsung Corning Precision (SCP). SCP in turn supplies to Samsung, LG Display and S-LCD. S-LCD is a LCD panel manufacturing joint venture between Samsung and Sony. 

Source: The Wall Street Journal

[tags]Corning, LCD Glass, LCD Glass Manufacturer, Samsung Corning Precision, SCP, GLW[/tags]

Leave a Reply