Here's Why You Should Give Corning Some More Time

LCD specialist Corning (NYSE: GLW  ) came out with better-than-expected numbers recently, though its first quarter overall could have been better. Let's take a closer look at where things stand for the Gorilla Glass maker.

Shares rose on the company's earnings report, but even though Q1 revenue beat Street expectations, remaining flat at $1.92 billion, net income plummeted 38% to $462 million, mainly because of pricing pressures in its LCD division. Volumes did record a surprising improvement, and that was a welcome sign for the company's display-technologies division, which is responsible for LCD production. The former accounts for almost 90% of Corning's total net income.

Corning's problems in the LCD segment are pretty understandable, as LCD television and display manufacturers have been having a tough time of late. For example, LG Display (NYSE: LPL  ) , one of the leading LCD display manufacturing companies in South Korea, recently reported a $113 million Q1 net loss, marking its third consecutive down quarter.

But there are a host of other reasons to feel optimistic about the financial health of LCD television manufacturers. And that should spell good news for companies like Corning.

Back on the growth path
According to research firm NPD DisplaySearch, consumer demand for televisions should improve this year. The quantity of LCD TV shipments is expected to grow by about 9% from the previous year to 225 million units. And there's always the possibility of an industry shakeup by the one of the most admired brands in the world: Apple (Nasdaq: AAPL  ) .

There's increasing speculation that Apple will begin producing the so-called iTV in May or June, as foreign suppliers begin shipping specialty parts for the much-hyped television. So while Corning already manufactures a majority of the glass components used in Apple's iPhone, this potential new product may further drive sales of Corning's famed Gorilla Glass in the near future.

The Foolish bottom line
Corning had a poor first quarter, but there are enough reasons to be hopeful about the company's future profitability. And with smartphones and tablets all the rage, this is one company I'd keep a close watch on. Stay up with the latest news and analysis on Corning by adding it to your free Watchlist.

Corning may just be one of the great ways to profit from the booming demand for tablets and smartphones. To find out some other names, check out a completely free report from The Motley Fool called "The Next Trillion Dollar Revolution." Get it now while it's still free!

Fool contributor Keki Fatakia holds no shares in any of the companies mentioned in this article. The Motley Fool owns shares of Corning and Apple. Motley Fool newsletter services have recommended buying shares of Corning and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, 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.


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  • Report this Comment On May 04, 2012, at 3:25 AM, youyi wrote:

    How do you calculate Display Products Net Income of 2349 is almost 90% of total Net Income of 3213?? Seems more like 75%.

  • Report this Comment On May 04, 2012, at 8:49 AM, papadel wrote:

    very myopic article. It completely ignores the other four segments of GLW. The growth of these four segments is the real secret to glw's success. I would have thought that anyone with any sense of business would easily realize that you cannot rely on one part of your business to always carry you through good and bad times.

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