Corning Inc, the largest maker of glass for flat-panel televisions, declined the most in eight weeks in New York after saying glass prices contributed to a 53 percent drop in fourth-quarter profit and are still sinking.
Corning retreated 11 percent to US$13.05 at the close, its biggest plunge since November. The stock has fallen 38 percent over the past 12 months.
Sales of flat-panel TVs, many of which use Corning’s glass, fell last year at retailers such as Best Buy Co. Consumers are buying fewer TVs even as retail prices decline, Corning chief financial officer James Flaws said at a conference call yesterday.
Component makers such as Corning have capacity that isn’t being used, Flaws said.
“The real concern for investors is what happens in the glass industry and how they deal with excess capacity,” Alkesh Shah, an analyst with Evercore Partners Inc in New York, said in a telephone interview yesterday.
“Management is making the right decision to reduce capacity. The question is will they reduce enough, and what will competitors do,” Shah said.
Shah has an “equal weight” rating on Corning.
Net income for Corning declined to US$491 million, or US$0.31 a share, from US$1.04 billion, or US$0.66, a year earlier, according to a statement yesterday.
While profit excluding some items matched the US$0.33 average estimate of 21 analysts surveyed by Bloomberg, the company also said that earnings from affiliates that accounted for more half of the pretax income would fall in the first quarter amid “significant” price declines.
Corning said first-quarter earnings excluding some items may fall by 5 to 20 percent from the previous quarter at its affiliates, including Dow Corning and Samsung Corning Precision Materials. The affiliates provided 58 percent of Corning’s pretax profit in the fourth quarter, according to the statement.
The company, based in Corning, New York, had cut its fourth-quarter forecast on Nov. 29, after price declines for LCD glass and the loss of a contract in South Korea. Corning said then that earnings might drop 30 percent, not 5 percent as predicted in October.
A Corning spokesman, Daniel Collins, said the company would disclose more details about its expectations for this year at an investor meeting on Feb. 3.
“It’s still going to be a tough year,” said Darice Liu, an analyst with Brigantine Advisors, citing uncertainty about the economy, in comments made before the earnings report.