There's Nothing Corny About Corning

Though it hurts to see older products fading into the background, glass and ceramics manufacturer Corning (NYSE: GLW  ) is sitting pretty at the crossroads of several megatrends.

That's the main takeaway from the company's first-quarter report. The display technologies division, which is Corning's largest segment by sales, saw revenue fall 11% year over year amid rapidly declining pricing. But sales of fiber-optic cables to the telecom industry jumped 7%, while the more advanced specialty glass segment that includes Gorilla Glass sales soared 13%. Life sciences gained 8% thanks to a string of recent acquisitions, and environmental technologies nudged up by 2%.

All these moving parts add up to a 2% year-over-year revenue boost, or $1.92 billion. Non-GAAP earnings fell 36% to $0.30 per share. If these numbers sound gloomy, keep in mind that the swooning prices on LCD glass have been obvious for some time. Analysts expected even deeper damage. Corning beat the Street's earnings estimates by 7% on a 2.6% revenue surprise.

The premium Gorilla Glass product will drive growth throughout 2012. It "remains the cover glass of choice for most smartphones, tablet computers, and other consumer IT products," says CFO James Flaws. Indeed, these strong but thin and light panels cover the screens of several Apple (Nasdaq: AAPL  ) products, from the iPhone to the iPad, as well as high-end Androids from Samsung and Motorola Mobility (NYSE: MMI  ) . Sales for high-end smart devices are absolutely exploding, and look like they should continue to climb for years to come. This is one way for Corning to ride the coattails of the most successful smartphones and tablets on the market -- we consumers have come to expect nothing less than Gorilla protection out of our expensive digital leashes.

The fiber optics give Corning yet another angle at the mobile computing boom. The actual smartphones and tablets rely on rich data feeds to keep us entertain, informed, and productive. High-speed networking is essential to this model. Sure, there's a wireless connection in there somewhere, but cell towers and Wi-Fi networks must connect to the services you want to use and that's where the fiber comes in.

With this two-pronged plan of attack, Corning is one of the best ways to play the mobile computing revolution today. In the handset market, you have to pick a winner and risk coming out on the losing side. A mobile chip builder such as Cirrus Logic gets you out of that vendor lock-in bind, and Cisco Systems gives you a direct line on the networking angle, but I can't think of a single stock that covers both end-users and network infrastructure the way Corning does.

If you're not ready to invest in Corning today, do your portfolio a favor and add the stock to your Foolish Watchlist right now. It only takes a couple of clicks to get the inside track on this stock.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Cirrus Logic, Corning, Cisco Systems, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Corning. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1871325, ~/Articles/ArticleHandler.aspx, 8/29/2014 4:39:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement