Despite dropping more than 9% following its second-quarter results on July 29, Corning Incorporated (GLW -0.54%) stock has still risen by more than a third during the past year. So where does that leave investors now? Here are five things Corning management wants you to know going forward.

Tablets -- not smartphones -- are the biggest driver for Gorilla Glass

Corning's earnings press release noted Gorilla Glass sales suffered in Q2 due to "lower-than-expected retail demand for smartphones and high-end tablets, and lower-than-expected sales for planned new models."

Corning's Gorilla Glass is driven primarily by tablet and notebook sales, Credit: Corning Incorporated.

This naturally spurred worries that Gorilla Glass might be losing significant smartphone share to alternative materials like Sapphire, most notably from speculation for Apple to launch a Sapphire-covered iPhone 6 next month. Even so, Corning CFO Jim Flaws insisted that Specialty Materials sales -- which includes Gorilla Glass -- will be up 10% sequentially from Q2, driven mainly by higher Gorilla Glass volume. Though that's lower than Corning initially expected, Flaws explained:

These changes are most significant in the tablet area and on touch notebooks. The touch notebook market is not developing at the pace we expected, and our share remains similar to last year. The change to our outlook for tablets is having the largest impact on our forecast. Now, we estimate the overall media tablet market only growing approximately 8% to 10%, nowhere near the pace we had expected entering 2014. And this growth was occurring only in unbranded media tablets.

We have not lost any share with branded media tablets, but because our share of unbranded tablets is lower, our overall share will slip slightly this year compared to last. We have not made any significant change to our smartphone forecast at this time, but the second half ramp of new models is important to us. Of course, one reminder: Smartphones are much smaller than tablets, so the square foot impact of phones is much smaller. And again, our share of forecast in phones remains similar to our original expectations.

For perspective, investors should also keep in mind that, last quarter, Specialty Materials generated "just" $298 million in revenue, or less than 12% of Corning's total.

Corning is "delighted" by the LCD glass market

A Corning Scientist studies a glass sample, Credit: Corning.

Remember, last quarter Corning's Display Technology net income suffered due to the impact of larger-than-expected LCD glass price declines, and delayed volume due to a "technical issue" at an unnamed Korean customer. This quarter, Flaws provided an encouraging update on both challenges:

[I]n the current year, we raised our screen size forecast significantly in the above 30 inch group for televisions. [...] We continue to feel good about the glass market this year inventory levels appear healthy and glass supplies seems in line with demand.

We expect the LCD glass market to be up low single digits in Q3 versus Q2. Corning's glass volume is expected to be up mid single digits driven by the continued share recovery at the one customer in Korea. Now, we expect LCD glass price declines in Q3 to further moderate and to be at the rates that we experienced for most of 2013. We are delighted by this return to the moderate levels.

Considering that Display Technologies is Corning's single largest source of revenue -- generating nearly 43% of its total at $1.1 billion in Q2 -- I can't blame Corning management for its "delight" that both key challenges have abated.

Telecom, Environmental segments are also strong

Corning's other businesses are also performing admirably. Specifically, Flaws stated: "[W]e are seeing excellent growth in environmental and optical communications -- actually stronger than our plan. [...] I think the optical communications and environmental segments are having fabulous years."

To be sure, optical communications -- or telecom -- sales, rose 14% year over year, to $686 million on broad-based strength in fiber-to-home and wireless solutions. It's worth noting, however, that optical net income rose just 5% during the same period, as price declines in the segment remained a drag on profitability.

Meanwhile, environmental sales in the second quarter grew 25% year over year, to $285 million. For that, investors can largely thank diesel sales, which were up 38%, as Corning's products benefited both from strong truck sales in North America, and new regulations in China and Europe. And environmental net income fared even better, rising 42% to a new segment record on the heels of Corning's manufacturing efficiencies.

The Acquisition of SCP is yielding big synergies

In January, Corning announced it had completed its plan to obtain full ownership of Samsung Corning Precision Materials, 43% of which was previously owned by Samsung Display. In exchange, Corning issued to Samsung Display $1.9 billion in new convertible preferred shares, and Samsung purchased an additional $400 million in other new convertible preferred shares. This quarter, Flaws offered some color on the current status of that acquisition:

In the first quarter, we closed on the acquisition of SCP, now [Corning Precision Materials], and began integration activities. These activities are proceeding very well, realized about $15 million pre-tax and synergies during the second quarter, and are track for $30 million in the third quarter and $90 million in synergies for the full year.

As promised, we are also updating our synergy forecast for the out years. And now, believe we can attain the $170 million in synergies in 2016 which had been in 2017 and ultimately attain a $210 million run rate in 2017.

Considering Corning has already repurchased enough shares to offset the impact on fully diluted EPS embedded in the convertible preferred stock offering to Samsung, long-term investors should be more than pleased with the ongoing synergies this deal will offer. 

Corning generates boatloads of cash (and gives it to you)

Finally, it's worth noting that Corning is generating mounds of cash all the while. Specifically, Flaws noted:

[W]e ended the second quarter with $5.9 billion in cash and short-term investments. We had a very strong operating cash flow in the quarter. Strong operating cash flow also resulted in strong free cash flow in the quarter of about $600 million.

Corning seems determined to return as much of that cash to shareholders as possible. In addition to its $0.10 per-share dividend last quarter, that included completing a $1.25 billion accelerated stock repurchase program, and Corning purchased $200 million in shares on the open market. What's more, Corning still has roughly $400 million remaining under its current share repurchase program, and intends for repurchase activity to continue in the third quarter.