Manufacturer Corning (GLW 23.10, +0.73) delivered better than expected fourth quarter earnings results, posting a profit of $0.40 per share, excluding items, on a 16% increase in sales to $1.58 billion. In October the company guided for fourth quarter earnings per share in the range of $0.36 to $0.38 and sales of $1.50 billion to $1.55 billion.
The strength in the period was driven by a 25% sales increase in its core Display Technologies segment, which prospered from continued strong global demand for LCD televisions and notebook computers. Telecommunications segment sales dropped 9.0% sequentially, yet that was owed to normal seasonality and was actually a bit better than the forecast for a 10% decline. Sales for the Environmental Technologies segment jumped 22% year-over-year while Life Sciences sales rose 4.0%
Importantly, Corning provided some reassuring guidance for the first quarter. It expects sales in the range of $1.59 billion to $1.62 billion and earnings per share in the range of $0.41 to $0.43 before special items. Consensus estimates, according to First Call, had been pegged at $1.52 billion and $0.36.
While the company acknowledged the risks of an economic slowdown to the industry and its business on the conference call, Corning added that it isn't seeing any evidence that suggests economic factors are slowing the consumer's appetite for LCD TVs. Sales of its diesel products, however, have seen some impact due to the slowdown in the trucking industry.
Glass prices are expected to see continued moderate price declines, yet overall demand is expected to be a compensating factor that boosts gross margins in the first quarter to as high as 49% versus 45.2% in the year-ago period. Corning said it anticipates first quarter sales volume in Display technologies to be consistent with the fourth quarter as it and Samsung Corning Precision are expected to run at full capacity.
Sales for the Telecommunications and Environmental Technologies segments are both projected to be up about 5% sequentially, with Life Sciences seeing a slight boost.
Corning's stock reacted positively to the report and outlook, but perhaps not as much as one would expect in an environment where many companies are strikingly cautious about the outlook. Latent concerns that Corning's business will see more of an impact from the U.S. slowdown tempered the market's enthusiasm for its report. Nonetheless, we continue to like the stock, which is up 11% since our initial profile last January.
GLW is reasonably priced at 14.5x estimated earnings which are projected to increase 13% versus 2007; moreover, it is apt to be a tangential play on fiscal stimulus spending later in the year as consumers direct tax rebate money to the purchase of LCD TVs.
The $20 level is an area of long-term support for the stock. Recognizing the market's volatile nature and the harsh treatment many companies receive in the event of an earnings disappointment, one should consider applying a stop-loss order below that mark.
--Patrick J. O'Hare, Briefing.com
The strength in the period was driven by a 25% sales increase in its core Display Technologies segment, which prospered from continued strong global demand for LCD televisions and notebook computers. Telecommunications segment sales dropped 9.0% sequentially, yet that was owed to normal seasonality and was actually a bit better than the forecast for a 10% decline. Sales for the Environmental Technologies segment jumped 22% year-over-year while Life Sciences sales rose 4.0%
Importantly, Corning provided some reassuring guidance for the first quarter. It expects sales in the range of $1.59 billion to $1.62 billion and earnings per share in the range of $0.41 to $0.43 before special items. Consensus estimates, according to First Call, had been pegged at $1.52 billion and $0.36.
While the company acknowledged the risks of an economic slowdown to the industry and its business on the conference call, Corning added that it isn't seeing any evidence that suggests economic factors are slowing the consumer's appetite for LCD TVs. Sales of its diesel products, however, have seen some impact due to the slowdown in the trucking industry.
Glass prices are expected to see continued moderate price declines, yet overall demand is expected to be a compensating factor that boosts gross margins in the first quarter to as high as 49% versus 45.2% in the year-ago period. Corning said it anticipates first quarter sales volume in Display technologies to be consistent with the fourth quarter as it and Samsung Corning Precision are expected to run at full capacity.
Sales for the Telecommunications and Environmental Technologies segments are both projected to be up about 5% sequentially, with Life Sciences seeing a slight boost.
Corning's stock reacted positively to the report and outlook, but perhaps not as much as one would expect in an environment where many companies are strikingly cautious about the outlook. Latent concerns that Corning's business will see more of an impact from the U.S. slowdown tempered the market's enthusiasm for its report. Nonetheless, we continue to like the stock, which is up 11% since our initial profile last January.
GLW is reasonably priced at 14.5x estimated earnings which are projected to increase 13% versus 2007; moreover, it is apt to be a tangential play on fiscal stimulus spending later in the year as consumers direct tax rebate money to the purchase of LCD TVs.
The $20 level is an area of long-term support for the stock. Recognizing the market's volatile nature and the harsh treatment many companies receive in the event of an earnings disappointment, one should consider applying a stop-loss order below that mark.
--Patrick J. O'Hare, Briefing.com
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