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Unformatted text preview: Please see important disclosure information on pages 9 - 11 of this report. Event We're revisiting our views on Corning ahead of the Consumer Electronics Show in Las Vegas. Key Points CORNING / CES PREVIEW... This year, we expect the buzz around CES will again be focused on new TV innovations including: better picture quality; thinner TVs; improved energy efficiency; faster refresh rates; and Internet-connected TVs. For Corning, 60-65% of the organization's all-important LCD glass business is sourced via LCD TV end markets. DON'T LOSE THE BIGGER PICTURE... At CES, we'll be looking for evidence of future reductions in LCD TV price points. Outside of Japan, global LCD TV unit sales would have to grow roughly 20% to meet full year 2011 expectations (214.5 million units). Roughly two-thirds of this growth will have to come from Emerging Markets where recent innovations displayed at CES will have a minimal impact on consumer demand. As such, we'll be more focused at CES on potential innovations and industry dynamics that can help drive elasticity of demand in the LCD TV space going forward. FOCUS ON GORILLA GLASS ... We expect that Corning will focus their CES commentary on Gorilla Glass. We expect the organization will maintain its very bullish stance on the new product. From our perspective, the big question is Corning's ability to ramp supply of Gorilla we expect management will continue to restrict their comments in this regard. Valuation/Risks Risks: 1) macroeconomic uncertainty; 2) supply chain inventory corrections; 3) manufacturing disruptions; 4) currency risk; and 5) any changes to the oligopoly nature of the glass substrate market. Corning shares trade at 10x 2011 EPS. We're leaving our price target unchanged at $18.25, a slight discount to group average valuations. January 3, 2011 Technology Electronics Supply Chain United States of America Company Update Corning (NYSE: GLW) CES Preview... A Focus on Gorilla Glass Investment Summary We expect that the shares probably can't work for awhile as glass inventory levels and price erosion rates normalize. We continue to like the long-term fundamentals of the business. Rating: HOLD Price: $19.32 Price Target: $18.25 Bloomberg: NYSE: GLW Market Data 52-Week Range: $21.10-$15.45 Total Entprs. Value (MM): $27,911.6 Market Cap. (MM): $30,525.6 Insider Ownership: 0.4% Shares Out. (MM): 1,580.0 Float (MM): 1,570.0 Avg. Daily Vol.: 13,308,674 Financial Summary Net Debt (MM): ($2614.0) Return on Avg. Equity: 19.4% Dividend Yield: 1.1% Total Debt (MM): $2,415.0 Tangible Book/Share: $10.02 P/Tan Book: 1.93x Total Debt/Cap: 8.6% USD 2008A 2009A 2010E 2011E Rev. (MM) 5948.0 5395.0 6532.0 7500.0 EV/Rev. 4.7x 5.2x 4.3x 3.7x EPS Mar 0.44 0.10 0.52A 0.37 Jun 0.49 0.39 0.58A 0.47 Sep 0.46 0.42 0.50A 0.55 Dec 0.15 0.44 0.45 0.53 FY Dec 1.56 1.36 2.05 1.92 FY P/E 12.4x 14.2x 9.4x 10.1x Consensus Adjusted 2.08 1.90 George C. Notter (415) 229-1522, firstname.lastname@example.org Michael Geenen (415) 229-1553, email@example.com Please see important disclosure information on pages 9 - 11 of this report.Please see important disclosure information on pages 9 - 11 of this report....
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- Spring '11