Corning‘s (NYSE:GLW) fourth quarter 2013 revenue declined 9% year on year due to a decline in revenue from its display and specialty materials businesses.  Its full year revenue also declined 2.5%. Corning’s net profits grew a staggering 171% on account of cost reductions and payment received for the settlement of a dispute in China. This drove up the fourth quarter’s earnings per share by 19 cents. The full year’s earnings per share rose 23% to $1.35. Corning’s share prices dropped 10%, from $18.22 to $16.59, after the announcement of the fourth quarter results.
Declining LCD Prices Take A Toll On Corning’s Display Business Revenue
Corning’s display business manufactures LCD glass substrates for displays on consumer electronics such as TVs, mobiles, notebooks and tablets. In the fourth quarter, Corning’s revenue from the segment declined 23% due to moderate LCD price declines caused by excess inventory.  However, volumes were up by 5% year on year due to higher demand for LCD glass driven by larger-sized screens on TVs, mobiles, notebooks and tablets.
Corning anticipates the LCD price declines to be higher in the first quarter of 2014 led by competitive pricing mechanisms in its new contracts announced in late 2012.  However, the declines should become moderate after the first quarter. Corning expects synergies from its acquisition of Samsung Corning Precision to drive up revenues and bring down costs for its display segment in the first quarter of 2014.
Specialty Materials Business Suffers Due To Inventory Accretion
Corning’s specialty materials business is primarily involved in manufacturing Gorilla Glass, a protective cover glass, for mobiles, notebooks and tablets. The segment’s revenue declined 29% year on year in the fourth quarter of 2013 impacted by a 10% decline in volume due to lower sales of Gorilla Glass.  Sales of Gorilla Glass have been declining throughout the year due to the impact of excess inventory build-up in the supply chain in the fourth quarter of 2012. The Gorilla Glass inventory is expected to stabilize in the first quarter of 2014. 
Corning’s Non-Display Businesses Perform Well
The non-display businesses include its environmental technologies segment, life sciences segment and optical communications segment, earlier known as telecommunications segment.
- Environmental technologies revenue grew 9% driven by higher sales in the U.S heavy duty truck market and Europe’s light duty diesel vehicles market.
- Higher carrier sales in North America led to 12% growth in revenue from the optical communications segment. 
- Life Sciences segment posted 14% growth driven by higher sales at Discovery Labware, which Corning acquired in 2012.
We are in the process of incorporating Corning’s fourth quarter earnings into our analysis and will be revising our stock price estimate of $17.33 shortly.Notes: