CORNING SWINGS TO FIRST-QUARTER PROFIT ON LCD GLASS
Corning, riding strong demand for its LCD glass, reversed a year-earlier $205 million first-quarter loss to post a $55 million profit as sales rose to $844 million from $746 million.
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The display technologies business, which includes LCD glass, boosted its net income to $118 million from $37 million, as sales increased to $230 million from $140 million. Overall gross margin improved to 35.5% from 29.5%. Margin generated by Corning’s LCD operations in Taiwan narrowed the gap with those posted by the Samsung Corning Precision joint venture in S. Korea, company officials said. Corning, however, didn’t release gross margin for the display technologies segment. The Taiwan facility, which recently started sampling 7th-generation (7G) glass substrates (1.8x2.2 m), traditionally has lagged behind the joint venture because it mainly produces 1G-4G glass, CFO James Flaws told analysts in a conference call Fri.
Samsung Corning Precision has focused on developing larger substrates and Samsung plans to open a 7G plant by early 2005. Corning will narrow the margin gap between to the 2 operations “quarter by quarter, but we still have a ways to go,” Flaws said. Corning is sold out for LCD glass and there’s “no evidence of inventory back up at any of the panel manufacturers,” Flaws said. Power surges near Corning’s LCD plant in Taiwan resulted in “brief disruptions” in electricity on April 16, that had an overall “trivial” impact on the business, COO Wendell Weeks said. Meanwhile, Corning’s CRT joint venture has been relegated to the “other revenue” category on the balance sheet that also includes semiconductors. That business segment posted a $31 million loss during the quarter, vs. a $36 million profit a year ago, as revenue declined to $82 million from $86 million.
Corning, which last year closed its TV tube glass plant in State College, Pa., continues to operate a plant in Korea under a joint venture with Samsung. Corning’s largest business, telecommunications, reduced its net loss to $43 million from $63 million a year ago as revenue decreased to $312 million from $352 million. Corning’s optical fiber business will likely benefit from telcos recent moves to bring fiber connections to U.S. households. A major Corning customer, Verizon, recently said it planned to pass 1 million homes this year. Corning has overall optical fiber orders in the “single-digit millions” of dollars thus far, Flaws said.
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The U.S. Appeals Court, N.Y.C., partly upheld a lower court ruling in Corning’s favor, in a year-old dispute over patents on the production of glass for LCDs. The Appeals Court said the U.S. Dist. Court, Rochester, N.Y., ruled correctly last July when it found that PicVue Electronics of Taiwan failed to show Corning didn’t own the trade secrets at issue, or the information was in the public domain. But the Appeals Court, agreeing with PicVue’s argument that the lower court erred when it granted Corning’s motion for a preliminary injunction, vacated that order and remanded that part of the case to the Dist. Court. Among other arguments, the higher court found that the injunction doesn’t meet proper specificity requirements because it doesn’t identify the trade secrets and copyrighted works that it bars PicVue from infringing.