1 Big September Announcement Apple Won't Make

Though Apple's rumored iPhone announcement dominates most investors' September calendars, I'll be eagerly awaiting a very different event thousands of miles away from Cupertino, Calif. In Frankfurt, Germany, at the 2013 IAA Frankfurt Motor Show, BMW (NASDAQOTH: BAMXF  )  will officially debut its 2015 i8 plug-in hybrid electric car. And in advance of that unveiling, the company has released some intriguing technical details of the car-- including that the car's rear window will feature Corning's (NYSE: GLW  ) Gorilla Glass . 

The BMW i8. Source: Company photo.

Driving in a new direction

Odds are that, even if you don't think you know what Gorilla Glass is, you've already come in contact with it a few hundred times today. According to Corning's website , Gorilla Glass is found on over 1.5 billion advanced devices, covering 1,000 product models from 33 major brands. And, many people will be coming in contact with it a lot more in the near future, for Corning will soon be featuring its Gorilla Glass NBT in touch-screen notebooks.

Incorporating the Gorilla Glass into cars is a deceptively big deal. It offers Corning a chance to gain traction in a new industry. Granted, it may seem like a stretch for the material to leap from a single luxury car to wide use throughout the automotive market. But remember that the first person to monkey around with Gorilla Glass for smartphones was Apple's Steve Jobs, who was looking for a way to prevent his keys from scratching his phone's display. In essence, Corning gained its foothold in the smartphone market by first being introduced in that sector's luxury model: the iPhone. 

Gorilla on wheels

The i8 will feature two laminated sheets of 0.7mm thick Gorilla Glass sandwiching an acoustic sheet in the rear window. This will dampen the sound, providing for a quieter ride, but that's not the sole purpose for incorporating the glass.

Corning senior vice president Jeff Evenson summed up why BMW and other automakers would benefit from incorporating Gorilla Glass into their cars at MIT Technology Review's Mobile Summit in June. He suggested that using the Gorilla Glass will reduce the vehicle's weight and lower its center of mass, consequently, improving its  fuel economy by a few percentage points depending on how much of the glass is used.

Car buyers prize good fuel economy as a way to reduce the pain of high gas prices. And automakers are facing strict Corporate Average Fuel Economy (CAFE) standards of 54.5 mpg, which will be in place by 2025. Incorporating Gorilla Glass may be one approach to help meet those standards.

Investors start your engines

Like with the iPhone, Corning has the opportunity to enter a market through incorporation in luxury models. According to a Bloomberg News article , BMW, with the i8, is just one of many companies like Volkswagen, Porsche, General Motors, and Honda that will all be looking to offer luxury models to compete with Tesla Motors in the rechargeable-auto market.

Gorilla Glass is a significant source of revenue for Corning, which contends that its 4% rise in revenue from $1.91 billion to $1.98 billion for Q2 2013 was largely attributable to high demand for the specialty glass. The company also noted: "Specialty Materials segment sales grew 17% sequentially to $301 million, driven by increased sales of Corning Gorilla Glass. Segment core earnings grew by approximately 33% over the previous year on strong Gorilla Glass manufacturing performance."

Automakers' adoption of Gorilla Glass in luxury cars is an interesting development in the specialty glass's story. But by itself, it's not a game-changer, just as it wasn't when Gorilla Glass appeared in the iPhone. But if it proves to be the first step toward incorporation in many different kinds of cars and trucks, Corning will stand to benefit handsomely, as it has in the smartphone and tablet market.

I've been considering adding to my position in Corning for some time, and now might be the time to do so. Corning had a good second quarter this year, with net income up 35% year over year, and a third straight quarter of EPS improvement, with 39% growth. At a P/E of 10.9 -- well below its industry's average valuation -- Corning, at the moment, seems inexpensive and attractive.


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