Corning Polishes Forecast for Glass

Date: 10 March 2005
Source: Thestreet.com

Date: 10 March 2005

Eager glass buyers have convinced Corning that it has a clear view of growth in its display business, but investors still want to see the goods.

The fiber cable and glass panel maker reaffirmed its outlook Wednesday for a first-quarter profit of about 12 cents a share on sales in the range of $1 billion. Those numbers haven't changed since the company's update last month and are in line with analysts' expectations, according to Thomson First Call.

Corning also stuck with its prediction that first-quarter liquid crystal glass, or LCD, shipments will grow between 5% and 10% over the previous quarter. The company said that glass panel buyer AU Optronics (AUO:NYSE ADR - news - research) of Taiwan has agreed to prepay for future LCD shipments.

The comments eased some worries on Wall Street about Corning's outlook, particularly on the LCD front, where some fans had feared a slowdown. Even so, "people are still skeptical" about Corning's confident LCD stance, says American Technology Research analyst Chris Dzurinko. "We need to see two quarters of execution above expectations for Corning to convince the skeptics."

The Corning, N.Y., tech shop is the leading supplier of thin glass sheets used by LCD panel makers for flat-panel TVs and computer monitors. Corning plans to spend $1 billion on the expansion of its glass production capacity this year.

To help ensure that demand for larger glass sheets is strong, Corning has been accepting prepaid arrangements from panel makers. AU Optronics is at least the third LCD panel maker to commit payments ahead of orders in an attempt to hold its position in line for future glass supplies. Two other panel makers, Chi Mei and ChunghWa Picture Tubes, have similar arrangements.

Analysts say that ideally these arrangements work for both the supplier and the buyer by strengthening ties between the two sides. "The panel makers are worried about supply," says Dzurinko. A couple years ago, supply was tight and they weren't getting what they needed, says Dzurinko, who rates Corning a buy. "I think they are looking ahead at the next cycle and figuring out how they can be prepared."

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Corning, AGC Glass-substrate Capacity Expansion Projects Unit: 1 furnace Company Location 2004 2005 2006 Corning U.S.
Japan 1 2 1 S. Korea 6 6 3 Southern Taiwan 4 2 0 Central Taiwan 0 4 2 AGC Japan 0 1 1 Taiwan (Yunlin) 1 1 1 Source: PIDA (Photonic Industry & Technology Development Association) Taiwan TFT-LCD Panel Makers Happy to See Substrate-price Falls in 2006 Taipei, Dec. 27, 2005 (CENS)--Both of the world's top-two glass-substrate makers are actively expanding their production capacity in Taiwan, which is expected to cut substrate transportation time and cost for local thin film transistor-liquid crystal display (TFT-LCD) panel makers and boost production efficiency, according to Michael Wang, project manager and senior analyst of Taiwan's PIDA (Photonic Industry & Technology Development Association).According to Wang, Asahi Glass Co. (AGC) of Japan has solved problems in lowering the defect-free rate for the production of fifth- and sixth-generation (5G, 6G) glass substrates, and is expected to tap the market with products with higher price competitiveness in 2006 to grab more market share in the 6G substrate businessIn addition, Wang added, the aggressive capacity added by both Corning of the U.S., the world's No. 1 substrate supplier, and AGC, the No. 2, will lead to price drops for glass substrates and will especially benefit TV panel makers such as AU Optronics Corp. (AUO) and Chi Mei Optoelectronics Corp. (CMO) in TaiwanCurrently, Wang pointed out, a 6G substrate is priced at about 27,000 to 30,000 Japanese yen, about 1,000 to 2,000 yen lower than in the third quarter of 2005.

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