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Corning May Cut Jobs to Reduce Costs

By Evan Niu, CFA - Oct 24, 2012 at 2:56PM

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Strong Gorilla Glass sales aren't enough to offset weakness in other segments.

Glassmaker Corning (NYSE: GLW) might enact "modest" layoffs in an effort to reduce costs, the company stated in an earnings release today. CFO James Flaws said weak macroeconomic conditions were hurting sales in many of its businesses, with some of them not hitting growth targets that management had previously set for the year.

The challenges are expected to continue through next year, and in order to achieve bottom-line growth Corning will likely pursue "selected cost reductions" that could entail "modest headcount reductions." The company also plans cost reductions in project spending and capital expenditures.

The company plans to take a pre-tax charge up to $50 million in the fourth quarter once the restructuring plan is finalized.

Corning's popular Gorilla Glass product, now found on most popular smartphones and tablets, saw record sales and performed much better than expected. However, this product is included in the company's Specialty Materials segment, which was just 18% of sales last quarter, so weakness in its other businesses is weighing more heavily.

Overall, third-quarter sales were $2.04 billion, up 7% from the second quarter, but down 2% year-over-year. Earnings per share excluding special items were $0.34, down 29% year-over-year.

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