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What: Shares of Gorilla Glass maker Corning (NYSE:GLW) slumped as much as 11% following the release of its third-quarter earnings results.
So what: Just because Corning has a well-diversified business, that doesn't mean it's immune to deteriorating profits. For the quarter, Corning reported a 2% decline in revenue to $2.04 billion and recorded a profit of $0.35 -- down notably from the $0.51 reported in the year prior. Furthermore, Corning suggested that it could be reducing its headcount to cut costs, resulting in restructuring charges totaling up to $50 million in the upcoming quarter.
Now what: Yikes! The key points here are that Corning is still profitable, still paying out a dividend, and still deriving its revenue from six business segments, which does provide a bit of revenue stability. However, the need to reduce headcount to cut expenses does raise a yellow caution flag. On paper, Corning makes a lot of sense, as its Gorilla Glass is becoming a staple in smartphones and tablets; however, its inability to control margins is a growing concern in the present. For those looking long-term, I suspect you'll find good value with Corning, but not all of my colleagues will agree with that assessment.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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