Corning Inc.'s (GLW) first-quarter profit fell 38% as sharply lower prices for its liquid-crystal-display glass continued to weaken results.
But shares were up 3.9% premarket at $13.87 as the company beat earnings and revenue expectations and it signaled improving pricing in LCD glass in the current quarter, as well as continued strength in its telecommunications segment. Through Tuesday's close, the stock is up 2.9% so far this year.
Corning, the world's largest maker of LCD glass for televisions, was hurt last year by lackluster TV demand, which has forced down prices for its display glass due to oversupply. The company responded in the fourth quarter by cutting capacity, hoping to restore some balance to pricing, but expected prices to remain depressed in the latest period. The display business accounts for more than a third of Corning's revenue and the vast bulk of its earnings.
Sterne Agee said this week that though Corning was expected to post significantly lower earnings in the first quarter, the company should benefit in future periods as glass gross margins could bottom in the second quarter and Corning continues to diversify into non-display segments.
"After two successive quarters of significant LCD glass price declines, we expect our price declines will be much more moderate this quarter," Corning Chief Financial Officer James B. Flaws said Wednesday.
As part of its diversification effort, Corning earlier this month unveiled plans to pay about $730 million in cash to acquire the bulk of Becton Dickinson & Co.'s (BDX) lab-products business, snapping up a portfolio it said will significantly increase its presence in the life-sciences market. The company also sees increased demand in its telecommunications business.
Corning posted a profit of $462 million, or 30 cents a share, down from $748 million, or 47 cents a share, a year earlier. Revenue edged down 0.2% to $1.92 billion.
Analysts surveyed by Thomson Reuters expected earnings of 28 cents a share on revenue of $1.87 billion.
Gross margin fell to 42.4% from 45.4%.
Display technology sales, the company's largest revenue driver, declined 11% to $705 million. Telecommunications sales were $508 million, up about 7%.
-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; email@example.com