Corning (NYSE:GLW) derives more than 50% of its business value from manufacturing glass substrates for active matrix liquid crystal displays (LCDs), which are primarily used in LCD TVs. So, the second straight quarterly decline in global LCD TV shipments is expected to impact the company hard. Global LCD TV shipments declined by 2% y-o-y in the second quarter of 2012 due to the economic slowdown in Europe and slowing growth in emerging economies.  The slower rate of price decline in LCD TVs in recent months also contributed to weaker consumer demand.
We expect the decline in global LCD TV shipments will further impact Corning’s LCD business, which is already reeling under low margins resulting from declining LCD prices over the past few quarters.
We currently have a stock price estimate of $13.07 for the company, marginally lower than its current market price.
Declining global TV shipments coupled with declining prices of LCD TVs
Global TV shipments declined 8% y-o-y in the second quarter of 2012.  Shipments for LCD TVs which constituted nearly 86% of the global TV shipments declined 2% over the same period. The Japanese market witnessed the largest y-o-y decline of 77%, followed by a 23% decline in other developed markets. The growth in emerging markets also moderated to 3% in Q2 from double-digit growth rates in 2011.  However, the Chinese market recovered from its first quarter decline to post 6% y-o-y growth in the second quarter. The eastern Europe markets also posted double digit growth rates. But, all other emerging markets posted a decline in TV demand compared to 2011.
This decline in TV shipments is primarily the result of a slowdown in the global economy in our view. As most of Europe continues to battle the recession due to the sovereign debt crisis, U.S. markets continue to remain weak and the major emerging economies are posting lower growth rates.
In addition, LCD TV prices have been declining over the past few quarters due to oversupply in the market. This has impacted LCD TV manufacturers, including Corning. The company posted a 5% y-o-y decline in revenues and a 39% decline in net income in the last quarter on account of declining LCD prices. 
LCD TV business constitutes nearly 52% of Corning’s overall value
Corning manufactures glass substrates for LCDs in its wholly-owned operations in North America and in a 50-50 joint venture with Samsung in Korea. Both the businesses combined constitute nearly 52% of Corning’s overall value. Hence, the declining LCD TV shipment volumes coupled with the declining per unit price of LCD TVs will impact Corning severely.Notes: