For two years straight, analysts have gazed, spellbound, as LCD TV glassmaker Corning
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
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:
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% |
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: