On Target Jim Flaws, CEO of Corning, reassured investors on Monday, May 19, 2009 that the company is on track to reach its 18% year over year growth rate for LCD glass substrate shipments on an area basis. Flaws, speaking at a JPMorgan tech conference held in Boston, told investors that the company needs to hit 10% to 15% quarter over quarter growth from the second quarter on.
We are planning on a build this quarter. But we are not expecting an increase like last year.
Cautiously Optimistic Looking at what Flaws said, it seems Corning will be cautious this time around. Corning has to look forward and match LCD glass demand that will materialize in the next 6 to 12 months. Building a LCD glass furnace facility takes about 6 months. If a LCD manufacturer is adding capacity or building an entirely new LCD fabrication plant, Corning will need to add capacity to fulfill that future demand and start building now. Of course LCD suppliers don’t have crystal balls and some times add capacity because they simply have the money to do it or due to competition against time and competitors.
We’d like to get back to the pricing model we were on in 2007 and most of 2008.
Stable Pricing That pricing model Flaws was mentioning is based on scheduled decreases of LCD glass substrate area prices on a quarter over quarter basis. Corning is able to do this since it is operating in what you might call an oligopoly with just two major LCD glass suppliers capturing more than 80% market share: Corning and AGC (Asahi Glass Co.). This helps both Corning and AGC normalize revenue streams and minimize rapid price declines.