Foolish Forecast: Everything's Coming Up Corning

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For two years straight, analysts have gazed, spellbound, as LCD TV glassmaker Corning (NYSE: GLW) beat their estimates with a stick, never stumbling once. Now, Corning is set to report its Q1 2008 numbers Tuesday morning. Tune in bright and early to learn whether this year will start off as well as the past two have.

What analysts say:

• Buy, sell, or waffle? Fifteen analysts rate Corning a buy by a 4-to-1 margin. Compute.
• Revenues. On average, they're looking for 22% sales growth to $1.59 billion.
• Earnings. Profits are predicted to leap 50% to $0.42 per share.

What management says:
Corning continues to sound optimistic notes about consumer demand for LCD TVs. Most recently, CEO Wendell Weeks told shareholders at last week's annual meeting that despite the looming recession, the LCD TV market is growing faster than Corning had hoped. Good news for LCD retailers like Best Buy (NYSE: BBY) and Circuit City (NYSE: CC), for panel makers such as AU Optronics (NYSE: AUO) and LG.Philips LCD (NYSE: LPL), and LCD TV assemblers such as Philips (NYSE: PHG) and Sony (NYSE: SNE). Good news, too, for Corning shareholders, who will be pleased to learn that past guidance may prove "too conservative."

What guidance was that, you ask? Well, last quarter, Corning told us to expect sales of no less than the $1.59 billion that Wall Street is looking for. Earnings-before-special-items (i.e., the massive shifts in net income caused by fluctuation in the value of Corning shares contributed to the asbestos litigation settlement fund) were expected to come in at about $0.42 per share. Don't be surprised if Corning beats both those numbers tomorrow -- Weeks is sounding awfully cheerful lately.

What management does:
As well he should be. Just look at the profit margins Corning's been posting:

Margins	9/06	12/06	3/07	6/07	9/07	12/07
Gross	44.1%	44.1%	44.1%	45%	46%	46.9%
Operating	17.1%	17.4%	17.6%	18.5%	20.5%	21.5%
Net	23.5%	35.9%	36.9%	35.3%	36.8%	36.7%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Mind you, that net margin number could take a hit tomorrow, even if everything goes swimmingly with the business. Remember that Corning has 25 million of its shares tied up in the asbestos litigation settlement fund -- or about 1.6% of its market cap. With those shares worth roughly 11.5% more today than they were at the time of last quarter's earnings, the value of Corning's contribution has risen about $70 million over the past three months. This number should show up as a charge to net earnings in tomorrow's release.

In short, what you want to do is focus on Corning's operating performance, and not the net -- because at Corning, the "bottom line" really isn't.

What did we expect out of Corning last quarter, and what did we get? Find out in:

• Corning's Mantra: Less Is More
• Foolish Forecast: Good Morning, Corning!