ROCHESTER, N.Y. (AP) — Corning Inc. posted a 53 percent slump in fourth-quarter profit Wednesday and said it is scaling back production of liquid-crystal-display glass because lackluster demand for LCD televisions has led to a steep drop in glass prices.
Its stock fell more than 10 percent, despite the assertion from Chief Financial Officer Jim Flaws that producing LCD glass remains "extraordinarily profitable."
The world's largest maker of LCD glass, Corning said it has had to cut its prices in recent months because Asian panel makers have excess supplies.
Corning hopes that by lowering its output it will help glass supplies "become balanced with glass demand at some point during the year," Flaws told analysts during a conference call.
Corning's net income fell to $491 million, or 31 cents per share, in the October-December period. That's down from $1.04 billion, or 66 cents per share, a year earlier. Excluding one-time items, it said it earned 33 cents a share. That matches the average forecast from Wall Street analysts, according to FactSet.
Revenue rose 7 percent to $1.89 billion from $1.77 billion, lifted by a 4 percent rise in sales of LCD glass, which totaled $780 million. That beat analysts' average expectation for revenue of $1.85 billion.
Flaws said "price declines would be significant" in January to March — as they were in the fourth quarter — and reach into double digits over the two quarters.
"We are hopeful that our pricing actions, combined with our capacity decisions, will help us get back to more stable price declines in the coming quarters," he said.
Corning shares fell $1.52, or 10.4 percent, to $13.10 in morning trading. The stock has ranged from $11.51 to $23.43 in the past year.
Corning expects the retail market for LCD products to grow from about 3.2 billion square feet in 2011 to 3.6 billion square feet in 2012.
DisplaySearch estimates that 206 million LCD-TVs were shipped worldwide in 2011, up 7.5 percent from 2010, while shipments in North America fell 2 percent to 37.5 million units.
In 2012, the market-research firm in Austin, Texas, projects a 9 percent jump in global shipments of 225 million units, and a 3.7 percent rise in North American shipments of 38.9 million units.
"With small but continuous improvements in the economic outlook ... there's better times ahead for the industry," said DisplaySearch analyst Paul Gagnon.
Propelled by ultra-strong Gorilla glass used in handheld and tablet devices, specialty materials revenue swelled 21 percent in the quarter to $238 million.
Environmental technologies revenue amounted to $238 million, in line with a year ago. Life-sciences revenue rose 2 percent to $143 million, and telecommunications sales rose 11 percent to $490 million.