How Corning's Earnings Will Fare

On Wednesday, Corning (NYSE: GLW  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. 

Corning has made a huge splash in the technology industry, with its innovative glass products becoming ubiquitous among the smartphones and tablets that have become so popular. Yet the drive toward smaller products has also challenged Corning to keep its overall revenue up in the face of weakness in other business segments. Let's take an early look at what's been happening with Corning over the past quarter and what we're likely to see in its report.

Stats on Corning

Analyst EPS Estimate

$0.24

Change From Year-Ago EPS

(20%)

Revenue Estimate

$1.96 billion

Change From Year-Ago Revenue

1.9%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Corning stay strong this quarter?
Analysts have gotten less excited in recent months about Corning's earnings prospects. They've cut their estimates on the just-finished quarter by $0.07 per share, with a reduction of full-year 2013 consensus earnings figures by more than double that amount. The stock has held up but has only gained about 3% since mid-January.

Corning has gained an impressive position in the mobile device industry because of its Gorilla Glass, and back in January, it revealed its latest version of the material at the Consumer Electronics Show. Yet as important as the mobile market has been for Corning, the company really needs to see gains in the LCD-television industry in order to get fully back on track. Despite some optimistic calls from the glassmaker, TV manufacturers Sony and Panasonic haven't seen strong sales lately, and Panasonic seem less confident about TV sales going forward.

One competitive threat to Corning that has arisen recently is the use of sapphire in smartphones. Although the material is expensive, it's stronger and more scratch-resistant than glass, and major smartphone manufacturers are starting to include sapphire in their products. Rubicon Technology and GT Advanced Technologies (NASDAQOTH: GTATQ  ) are taking advantage of the trend with their sapphire-production capabilities, and with GT products costing just three to four times as much as Gorilla Glass, future advances that bring prices down further could put Corning in jeopardy.

In Corning's quarterly report, watch for signs of how changing dynamics in the smartphone market are affecting the glassmaker. For now, the company retains its leadership position, but how Corning defends it will be important for shareholders going forward.

With the explosive growth of smartphones worldwide, many investors thought they would ride Corning's dominant cover glass to massive investment returns. That hasn't played out yet, as mobile growth has failed to offset declines in the company's core business. In this brand-new premium research report on Corning, our analyst walks through the business, as well as the key opportunities and risks facing it today. Click here to claim your copy.

Click here to add Corning to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (2) | Recommend This Article (1)

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  • Report this Comment On April 23, 2013, at 2:39 PM, BlueEyesGuy33 wrote:

    Thanks for the helpful article. This bit did jump out for me though: "... with GT products costing just three to four times as much as Gorilla Glass." -- Sounds to me like more that just a little room on cost for Corning to be just fine.

  • Report this Comment On April 25, 2013, at 6:25 PM, BillStacker wrote:

    @ BlueEyesGuy33 - I guess it depends on on how much it costs phone manufacturers to put glass on a single phone. If we are talking about $2 per phone, then 3x or 4x is not that big a deal when you are talking about device that could potentially retail for $400.

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