Corning (GLW) this morning reported better-than-expected Q1 profits.
The glass maker posted revenue for the quarter of $1.553 billion, up 1% sequentially and up 57% year-over-year. Non-GAAP EPS of 52 cents was a dime better than Street estimates. The company noted that it had “excellent results” across nearly all of its major business units, and that its display segment was “essentially sold out.”
Sales in the Display Technologies segment were up 9% sequentially and 119% year-over-year. Telecom sales were down 10% sequentially, in line with expectations. Sales in the company’s environmental unit were up 6% sequentially and 75% from a year ago. The specialty materials unit saw sales fall 13% sequentially, but grew 60% year-over-year.
Corning said it now expects the LCD glass market this year to be 2.9 billion to 3.1 billion square feet, up from a previous forecast of 2.8 to 3 billion square feet.
For the display segment, the company sees Q2 volume increasing in the mid-single digits for both its wholly owned business and for its joint venture with Samsung. The company sees sales in the telecom segment up 10%-15% sequentially. Sales in the specialty materials segments are forecast to rise 15%-25% sequentially, driven by strong demand for the company’s Gorilla glass business, a line of extra strong, thin, scratch-resistant glass which is used in handsets and laptops.
Corning says it now sees 2010 cap ex of $1 billion, up from a previous forecast of $600 million to $700 million, as it has restarted expansion at its Taichung, Taiwan facility, which had been halted in 2008 as a result of an industry-wide expansion.
In an interview with Tech Trader Daily this morning, CFO Jim Flaws noted that the higher-than-expected EPS in the quarter was due to a combination of a lower tax rate and higher gross margins. The strong margins, he adds, reflected high volumes and “strong manufacturing performance.”
Flaws says the company sees “very strong” retail demand for both LCD televisions and PC displays, which in turn has driven Corning’s customers “to run strong.” (Corning, of course, supplies glass to the panel makers, which in turn provide components to device makers, so they have only indirect exposure to the retail market.) Flaws says the company’s forecast for mid-single-digit growth in display glass volumes wouldn’t mean another sell out of capacity – but he says the company could sell out again if it hits the optimistic end of its internal forecast range.
Flaws notes that the company in Q1 restarted capacity that had been shut in the economic downturn, and will bring more capacity back on line in Q2. The added capacity in Taichung is not expected to come on line until the middle of Q4, he says.
On the telecom business, Flaws notes that the company is seeing both improvement in enterprise demand – for instance from the financial sector rewiring trading floors – as well as some increased capital spending by the carriers. Compared to 3-4 months ago, he says, demand “fells better in telecom.”
Finally, Flaws said that inventory in the supply chain is “right in the middle” of the normal range; not as lean as it was entering the year, but at an “appropriate level.”
GLW this morning is down 14 cents, or 0.7%, to $19.98.
No comments :
Post a Comment