Corning: Fourth Quarter Forecast

Corning Senior Vice President and Corporate Controller Tony Tipeny:

We disclosed in our third-quarter earnings call that we expected to regain lost market share in Korea in the fourth quarter. We significantly reduced LCD glass pricing during the quarter to compress our pricing premium, in light of the current state of glass over-supply in the industry. We believed these actions would result in the return of share at a major customer in Korea, in line with the terms stated in our long-term supply contract with them. However, following initial positive reactions, including higher shipments in October and early November, this customer recently informed us that they do not expect to honor the contract for the remainder of the quarter. As a result, Samsung Corning Precision Materials Co., Ltd. is not expected to reach its volume targets in Korea.

This “major customer in Korea” is likely to be LG Display. Tipeny expects more significant price declines in the fourth quarter.

While we expect worldwide glass demand to increase sequentially this quarter, we still believe there will be excess glass capacity. As a result, it is prudent for us to reduce capacity at both our wholly owned business and SCP. At our wholly owned business these actions will include delaying the start up of new glass melting tanks, as well as postponing the relighting of tanks that are down for repair. There will be no special charges in the fourth quarter as a result of these actions.

SCP will undergo similar capacity reductions in addition to shutting down several glass melting tanks. Corning’s worldwide LCD glass substrate production capacity will be reduced by approximately 25% by the end of the fourth quarter.