How Important Is The Optical Communications Segment To Corning?

-2.51%
Downside
32.96
Market
32.13
Trefis
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Corning

Corning (NASDAQ: GLW) has five primary operating segments – Display Technologies, Optical Communications, Specialty Materials, Environmental Technologies, and Life Sciences. Optical Communications is the largest operating segment for Corning and accounts for nearly 35% of its overall revenue. The segment has seen robust growth, with revenue growing at just under 18% in 2017, as a result of a string of positive developments, including new orders and investments from existing partners Verizon and Saudi Telecom, and the announcement of new and innovative products. We expect the strong growth to continue in the future, driven by increased consumption of streaming services. We have created an interactive dashboard analysis of Corning’s revenue growth that shows how much of the company’s future growth is likely to come from its Optical Communications segment. You can adjust the revenue and margin drivers to see the impact on the overall revenues and earnings from operations.

Increased Consumption of Streaming Services To Drive Optical Communications Revenue

Corning expects further improvement in the Optical Communications segment, as a result of exponential growth in the amount of data being transmitted and processed. This segment provides optical network components to service providers. Further, Corning in its April investor presentation discussed the growth of optical fiber and highlighted the shift from electrical to optical connections. We expect this segment to continue to grow, driven by strong demand for optical fiber products, thanks to increased consumption of streaming and cloud services. The acquisition of 3M’s communication markets business, which is likely to expand both its global reach and portfolio, should provide significant long term growth opportunities.

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As evidenced by the above charts, the Optical Communications segment is likely to contribute significantly to Corning’s growth in the next few years. The company is actively trying to deepen its penetration in the markets where opportunities are available, which could drive further growth over the long run.

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