Brigantine Dec 10 - BRIGANTINE ADVISORS Corning Inc. BUY...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
BRIGANTINE ADVISORS Display & Semiconductor Technologies December 9, 2010 1 Corning Inc. December 9, 2010 Darice Liu (646) 867-2337 [email protected] BUY (GLW, $18.86) Light at the end of the LCD Industry Downturn Tunnel; Reiterate Buy Investment Summary: While near-term data points to soft LCD fundamentals of panel pricing declines and excess inventory, we believe this is largely factored in shares. At this stage of the cycle, while we don’t believe we are in a full recovery (yet), we can see the light at the end of this LCD downturn tunnel. The closely managed LCD loading rates, improving inventory levels, IT panel pricing bottoming and TV panel ASP declines moderating, are promising positive datapoints, in our opinion. The last variable to the recovery equation is “growing demand”. Fundamentally, we believe Corning is a robust company building on its core competencies to increase its revenue opportunities (i.e. solar, environmental technologies, touch, life sciences), while maintaining its dominant position in current markets. Looking to Corning’s long-term picture of growth and new market opportunities, we are reiterating our Buy rating and $22 price target, based on 2x tangible book value. Event: Yesterday morning, Corning updated its 4Q10 guidance in a press release. Later in the afternoon, management presented at a sell-side investor conference and provided further details on 4Q10, 1Q11, Gorilla glass, taxes and cash status. Updated 4Q10 Guidance. Corning now expects all of its segments to perform inline or slightly better than initial expectations. LCD glass volumes are expected to be flat Q/Q vs. earlier guidance of flat to down slightly. With Taiwanese panel makers increasing its loading rates, Corning now expects its wholly own glass volumes to be up ~10% Q/Q vs. flat to down slightly. On the other hand, GLW also noted that Korean panel makers have recently lowered their utilization rates. SCP (Samsung Corning Precision) glass volumes are now expected to be down ~5%-10% Q/Q vs. flat to down slightly. No changes to its 4Q10 glass pricing guidance. What else? 4Q environmental sales expected to be up ~10% Q/Q vs. flat due to improved manufacturing diesel filter output; gross margins expected to be ~43% (note that this is inline to earlier guidance of “ unspecified down”, but now “quantified”. It also includes $17M R&D write off for green laser program); tax rate is expected to be 5% vs. 2%-3%. 1Q11 Color. For the first time, GLW provided preliminary color on 1Q11, stating that LCD glass volumes are expected to be flat Q/Q and that ASP declines would be more moderate than 4Q10. Positives. 1. LCD industry seems to be bottoming 2. Gorilla glass continues to ramp nicely. GLW also noted that 2011 revenue run rate of ~$1B remains the target; strong design pipeline Negatives. Gorilla TV cover glass expected to weigh on future margins more than expected. Source: MSN Money
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/05/2012 for the course FINANCE 101 taught by Professor George during the Spring '11 term at University of Phoenix.

Page1 / 9

Brigantine Dec 10 - BRIGANTINE ADVISORS Corning Inc. BUY...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online