Key Takeaways From Corning’s Q3 Earnings
Corning (NYSE: GLW) reported its Q3 earnings on October 24, and its GAAP net income increased by nearly 40% this quarter. Corning’s optical communications and specialty materials continued their strong performance driven by increased demand for carrier and enterprise network products and the sale of Samsung Galaxy S8 in the quarter. The Display segment, however, remained weak as LCD prices continued to fall, putting pressure on Corning’s margins. We expect the challenging environment in the Display segment to continue in the short term as small LCD demand is shrinking. Corning’s environmental sales grew by 5% this quarter which did not include the sale of GPFs (Gas Particulate Filters) in Europe. We expect Corning’s environmental sales to pick up starting next quarter as the sale of GPFs are likely to pick up.
Optical Communications, Specialty Materials Continue To Impress
As expected, Corning’s Optical Communications and Specialty Materials sales grew strongly in the quarter. Optical Communication growth was supported by strong demand for both enterprise and carrier products. We expect the demand in carrier and enterprise networks to remain strong in the short term due to growth in video content on social media.
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Corning’s Specialty Materials segment has been a steady growth driver for past several quarters now and this quarter was no different. The segment’s sales increased nearly 26% and profits were up by about 70% in the quarter. This quarter’s sales were driven by high Gorilla Glass shipments, particularly from Samsung’s Galaxy S8. Chinese smartphone makers have also contributed to Corning’s sales growth this quarter. Going forward, we expect Gorilla Glass shipments to slow down in the next quarter as iPhone X sales will likely start in the latter part of the fourth quarter and Galaxy S8 sales should also slow down. However, we expect Gorilla Glass shipments to bounce back starting 2018 due to the iPhone X.
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