For two years straight, analysts gazed, spellbound, as LCD TV glass maker Corning (NYSE:GLW) consistently trounced every earnings hurdle set for it. Corning got off to a good start on fiscal 2008 back in April, as it once again stomped expectations. But as I pointed out in a column earlier this month, things may have abruptly taken a turn for the worse in late June/early July.

What's more, with the stock having lost one-quarter of its value since its highs of early June, it seems people are nervous about just what it is that Corning will tell us when it reports second-quarter earnings tomorrow. Let's see if we can get a handle on the situation before the news breaks.

What analysts say:

  • Buy, sell, or waffle? Seventeen analysts follow Corning, giving the stock 13 buy ratings and four holds.
  • Revenues. On average, they're looking for 21% sales growth to $1.72 billion.
  • Earnings. Profits are predicted to jump 44%, to $0.49 per share.

What management says:
When last we heard from Corning on the subject of guidance, management was predicting somewhere between $1.71 billion and $1.75 billion in sales for this quarter, and between $0.47 and $0.50 per share in earnings before items (read: "before the accounting mess that is Corning's contribution to the asbestos litigation settlement fund").

Since then, Corning has done nothing but reiterate guidance and proclaim its confidence in the ability of retailers like Best Buy (NYSE:BBY), Sears (NASDAQ:SHLD), and Circuit City (NYSE:CC) to move LCD TVs off the sales floor and out the door. Only in recent weeks have midstream manufacturers like AU Optronics, LG Display (NYSE:LPL), and Sony (NYSE:SNE) begun casting cold water on this sunny optimism, warning of revenue shortfalls, soft demand, and production cutbacks.

What management does:
Seems to me that the recent nature of these grumblings from the manufacturers bode well for Corning's numbers tomorrow. As tall as they are already (see below), we could see the trend of rising profit margins continue.

Margins

12/06

3/07

6/07

9/07

12/07

3/08

Gross

44.1%

44.1%

45.0%

46.0%

46.9%

48.7%

Operating

17.4%

17.6%

18.5%

20.5%

21.5%

23.8%

Net

35.9%

36.9%

35.3%

36.8%

36.7%

46.2%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
But while tomorrow's news should be good, what really has Mr. Market's silicon shorts in a bunch is what Corning might say about the day after tomorrow -- or rather, the quarter(s) after tomorrow. In other words, Fools, Wednesday is going to be all about guidance.

If Corning sticks to its guns, and reassures us that the TV manufacturers' bad news is not affecting their demand for LCD glass, all shall be well and Corning's stock will zoom. If, on the other hand, CEO Wendell Weeks concedes that there's a problem looming on the horizon ... well, let's not dwell on that. How bad things will get will hinge on whether the stock has already fallen far enough to take the news into account, and how long Corning thinks it will be before things improve. Stay tuned.

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Both Best Buy and Sears are Motley Fool Inside Value stock picks. Best Buy is also a Stock Advisor selection. The Motley Fool owns shares in Best Buy.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.