Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of glass giant Corning
So what: For the final quarter of the year, Corning's total sales came in at $1.9 billion, a 7% increase from the fourth quarter of 2010. Earnings, meanwhile, dropped 28% year over year on an adjusted, per-share basis. However, that adjusted, per-share earnings tally of $0.33 met analysts' expectations, so that was actually part of the good news.
As for the bad news? The fourth quarter was a rough one for Corning's LCD-glass business, and while sales were actually up from a year ago, falling prices took a hatchet to profitability. At the same time, the company's venture with Dow Chemical
Now what: Here's the line from the company's press release that should be front-and-center on Corning investors' radar screens today: "The display industry is in a period of transition and we are in the process of resetting expectations for its future growth and profitability."
This isn't a reason to sell first and ask questions later, but it is a very real concern for shareholders. As the press release outlines, Corning's big challenge in the coming quarters will be to cut back capacity and hope that global supply and demand rebalance and allow pricing to recover. The market for LCD glass is certainly not going away -- in fact, it'll keep right on growing -- but investors in Corning will need to assess just how profitable that market will be for the company going forward.
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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.