How Corning Soared 44% in 2013http://www.fool.com/investing/general/2013/12/26/how-corning-soared-44-in-2013.aspx Dan Caplinger
December 26, 2013
Corning (NYSE: GLW) has been at the forefront of technology for decades, ironically using one of the oldest substances in civilization -- glass -- to make products for use in everything from vast fiber-optic networks to your handheld mobile device. Yet, as much attention as Corning gets from its prominent placement within smartphones from Apple (NASDAQ: AAPL), Samsung, and other popular device makers, Corning's turnaround stems from a much broader-based recovery that has wider implications for the entire industry. Let's take a closer look at what happened with Corning this year, and whether its stock will keep rising in 2014.
What made Corning shine brighter this year?
But the beginning of Corning's upswing in late April and early May came after Corning CEO Wendell Weeks gave an enthusiastic view of the company's prospects. Simply because of the sheer amount of glass involved, LCD televisions have been an incredibly important market segment for Corning, and that industry has seen weak sales cause poor demand for glass. Corning, however, gave positive guidance that price declines in the LCD market would finally slow down, helping to boost potential demand. That bore out in Corning's second-quarter earnings, with Display Technologies posting a 21% jump in revenue.
In addition, Corning also stands to benefit from greater activity in telecommunications and life sciences, both of which are areas of growth potential for the company. Corning's $730 million acquisition of most of the Discovery Labware unit of Becton Dickinson (NYSE: BDX) late last year gave it greater exposure to the pharmaceutical and health-care diagnostics sectors, with products including plastic lab tubes, flasks, and analysis dishes, as well as products for handling liquids. That move helped the Life Sciences segment earnings double from previous-year levels in the second quarter.
Some have noted that Corning's relationship with Apple isn't necessarily permanent. Fears at midyear that Apple might replace Gorilla Glass with a sapphire-based alternative proved unfounded -- at least for purposes of the fall release of the iPhone 5s and 5c. Yet, just last month, Apple entered into a major deal with sapphire producer GT Advanced Technologies (NASDAQ: GTAT), once again raising the question of Corning's staying power. For now, sapphire use might be limited to especially sensitive areas, but expanded use could threaten Gorilla Glass in the long run.
That made Corning's biggest news of the year all the more important, as shares surged when the company made a deal with Samsung whereby Corning took over full control of the Samsung Corning Precision Materials joint venture in exchange for Samsung taking a 7% stake in Corning. The move deepens Corning's relationship with the mobile-device giant, and puts it in a better bargaining position with Apple and other customers, all the while hopefully allowing Corning to benefit when Samsung's display sales finally start to accelerate.
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