Boston, MA 01/29/2014 (wallstreetpr) – Corning Incorporated (NYSE:GLW) is facing a real dilemma, its customers want to use less of its glass but increase the output. Though volumes have increased, the company has managed to do so by decreasing its prices and this has affected its margins.
Prices Decline:
Corning Incorporated (NYSE:GLW) has competed on the price front and managed to increase volumes but this has affected both its revenues and margins. The company reported revenues of $1.96 billion, down from $2.15 billion for the same period last year. They managed to beat the analysts’ expectations of $1.93 billion. The net income in the fourth quarter was also higher at $421 million from $155 million for the same period last year. This translated to $0.30 per share from $0.10 per share for 4Q2012. Earnings, excluding special items were also higher at $410 million translating to $0.29 per share; analysts had expected tem to be $0.28 per share. The company was helped by a decrease in the production and restructuring costs.
The Future:
Corning Incorporated (NYSE:GLW) cautioned that it expects the prices of LCD glasses to decline further in the first quarter of 2014. The decline is expected to be steep and more than that witnessed so far. That did not go down well with the investors and they reacted negatively. The stocks dropped by more than 6% in yesterday’s trading.
On the plus, however the company expected to reap the benefits of its acquisition of the balance 50% of Samsung Corning Precision. This acquisition will lead to direct strategic and financial benefits to the company. The incremental profitability leading from this acquisition as well as the buyback of shares may lead to a 20% in earnings per share, the company expects. Corning Incorporated (NYSE:GLW) plans to repurchase $2 billion worth of shares.
With its clients focusing on cost reductions, Corning will also find it hard to maintain its margins and improve on both revenues as well as earnings in the coming quarters.
