Corning’s Growth Momentum Continues in Q3’16 With Increased Demand in Display echnology
Corning (NYSE: GLW) reported its Q3’16 earnings on October 25th and the results came in line with the consensus estimates. Corning’s revenues grew across all of its segments, driven by strong demand in display technology market, consistent growth in optical communications and new product wins in specialty materials. A slowdown in LCD price declines also helped. Corning’s competitors’ profitability is already low and therefore we don’t see a lot of room for further price decreases. The company’s capital allocation framework and strategy to incubate open source innovation centers is likely to help build disruptive products in future. Additionally, new contract wins in specialty materials and new products (such as gas particulate filters, or GPFs) are something to cheer about.
Growth in Q3’16 Likely to Build Momentum For the Next Few Quarters
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Corning’s overall revenues grew by 4% in Q3’16 driven by strong performance in optical communications and displays. The strength in display panel demand is being driven by set makers ahead of the Q4 peak retail season. Additionally, the decline in the LCD glass pricing remained moderate and is also expected to stabilize in the next few quarters due to the increasing size of TV screens. Optical communications segment has grown at a CAGR of 11.8% over the past five years due to growth in global IP data and higher demand for cloud computing. We expect this momentum to continue.
New Product Launches in Specialty Materials and Wins in Environmental Technologies
Corning has target of doubling sales in the next four years despite the maturing of the IT and handheld devices markets. Corning intends to capture a price premium and win in new places in wearable and phone backs such as Gorilla Glass 5 and Gorilla Glass SR+.
Additionally, Corning won majority of platforms awarded to date for vehicles with GPFs (gas particulate filters) to meet the Euro VI regulation, which is likely to begin ramping in 2017. As of now sales of GPF’s are insignificant but with Corning’s commitment to invest $10 billion in growth opportunities, GPFs have the potential to become on of the major sources of revenues.
For precise figures, please refer to our complete analysis of Corning
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