Corning, Inc.
From the Investors Conference: Corning expects global demand for LCD glass to grow 25% to 30% in 2008, representing an increase of more than 450 million square feet of glass. A compound annual growth rate of 25% is expected for the 2007 to 2009 time period.
News: Corning declared a quarterly dividend on the company’s common stock of $0.05 per share to holders of record March 3!
Originally known as Corning Glass Works (that's where the ticker symbol comes from), Corning supplied the glass for Thomas Edison's light-bulb, engineered PYREX, and designed the surface of the Hubbell telescope. Today it has four operating segments: display technologies, environmental technologies, telecommunications, and life sciences.
Corning has a great outlook with glass substrates for LCD screens. Growth of the LCD market is exploding and profits are rising for Corning. Worried about the current United States economy? Only 29% of global LCD sales are made in the U.S. Always looking towards the future Corning just finished negotiations for a 10th generation glass substrate plant and some exclusivity to Sharp. 9th generation glass substrates are just now hitting the market with the 105 inch LCD at CES in La Vegas.
Fifty patents are used in making Corning's ClearCurve™ flexible fiber. The new fiber optics are 100 times more bendable than standard fiber, and offer greater speeds. The recent FCC ruling allowing phone companies to enter in exclusive contracts with provider services to multi-tenant buildings should provide a boost to the new bendable fiber product (think Verizon's Triple Play). Connexion Technologies was granted the first purchase for use in fiber to the home and multiple dwellings.
As a result of the joint four-year project entitled OSMOSIS (Optical Shared MemOry Supercomputer Interconnect System), IBM and Corning researchers have now demonstrated the most powerful optical packet switch. It combines 64 optical data links, each running at 40 Gigabit per second, which transmit up to 2.5 Terabits per second. For comparison, this corresponds to 20 HD DVD movies in a single second.
Corning is also doing well with clean diesel filter technologies. D-Filters will be ramping up in 2008 due to clean air act. Strict government emission standards will speed adoption of Corning's diesel engine products.
On the life sciences front Microreactor technology might redo the way specialty chemicals and pharmaceutical chemicals are manufactured. A new epic drug discovery system which is a way to do drug discovery in a label-free environment is being brought to the market soon. Single crystal silicon on glass and green lasers are being developed.
PEG = .85
Forward P/E = 12.42
08 EPS Growth = 1.73
09 EPS Growth = 1.89
Corning also has a 50% ownership stake in Dow Corning. Corning has very good financial health with good Operating Cash flow and Net Income. Corning now has $1.7 billion in cash (after debt) on the books. A quarterly dividend of $0.05 per share was paid on Dec. 14, 2007. Guidance was raised another $.02 for the quarter for about $1.59 for '08. Earnings growth rate is now expected to be 23% and PE ratio at 18. Management has been buying back shares, but you'll have to keep on top of it to see what the net repurchase actually is.
Don't forget to investigate the downside to this stock. Corning stock has been range bound recently. They have to contribute regularly to the asbestos fund due to their ownership of Dow Corning (thought they report profits after that deduction). The US economic slowdown can affect fiber and LCD sales, but Corning is powerful in the rest of the world to offset the US.