Update Corning (GLW)

A company gets my attention when it raises its dividend 50% as Corning (GLW) did on October 6. Especially when it combines that dividend increase with news of a $1.5 billion stock buyback. And even more especially when it adds in extremely clear guidance for investors to expect a 30% drop in sequential earnings per share because of a slowdown in its industry and some loss of market share. (Corning is a member of my long-term Jubak Picks 50 portfolio http://jubakpicks.com/jubak-picks-50/ )

I think the message from Corning’s management is extremely clear. They think that their company has a great long-term future (hence the dividend increase), that it seriously undervalued (hence the stock buyback), but that the near term is likely to be very rough (hence the negative guidance.)

Let’s take those three points one at a time, last-to-first, okay? Read more

Sell Corning (GLW)

Here’s the dilemma that Corning (GLW) presents to investors right now. It’s one that we’ll face a lot in 2010 with all kinds of stocks.

The Wall Street consensus says that Corning will announce earnings of 42 cents a share when it reports fourth quarter 2009 earnings on January 25.

That would be a huge 223% increase in earnings from the 13 cents a share that the company reported in the fourth quarter of 2008.

So why not hold onto the stock? No need to sell just because the shares have hit my $19 price target, right?  At $19, Corning sells for just 14.3 times projected 2009 earnings. That’s without a doubt cheap for a stock growing earnings at 223%.

The problem is that it doesn’t look like Corning is going to grow earnings by 223% in 2010. Or by 123%. But more like 23%. And just about all of that growth will be stacked into the first half of 2010. In the second half of 2010 Deutsche Bank projects that Corning will grow earnings by just one penny from the second half of 2009. That works out to 1.2% growth.

(I think that as investors get further into 2010 they will see a lot of stocks with this kind of earnings growth pattern: Big growth in the first half of the year on easy year to year comparisons and meager growth in the second half on tougher comparisons with post-economic-bust quarters.) Read more

Update Corning (GLW)

If you’ve owned Corning (GLW) shares for any length of time like I have, you’re familiar with this balancing act: Great long-term prospects push up the stock while short-term worries push it down.

That’s exactly what investors got in the market reaction to Corning’s third quarter earnings announced on October 26. The company reported earnings of 42 cents a share, beating Wall Street projections by 3 cents a share. Revenues were down 4.9% from the third quarter of 2008 but at $1.48 billion still came in $60 million above analyst expectations.

Dig a little deeper and the quarter showed exactly how good Corning’s future could be. Read more

Buy Corning (GLW)

I bought shares of Cisco Systems (CSCO) for Jubak’s Picks on September 25 because, among other reasons, the company has a history of buying promising new technologies and then using its huge market clout to grow them. It’s about as close to a venture capital fund as you can buy on the stock market.

Buying Corning will give your portfolio a similar new technology boost—with one difference: The new technologies you get from buying Corning were invented there. This company is one of the most prolific research and development operations in U.S. business. And unlike some companies that are good at inventing things but never manage to get them to market, Corning has been able to turn everything from fiber optic cable to ceramic dinnerware to glass for displays and LCDs into major—and profitable businesses. In many of these areas, LCD glass, for example, moreover Corning isn’t just a major player but the dominant company in the sector. The new technologies that Corning is set to roll out (or even better that it is now rolling out) make up a long list: Gorilla glass, green lasers, Jade, and Epic. See the company’s web site at corning.com for more detail on these.) Read more

Update Corning (GLW)

The recent past was much better than expected. The near term future is uncertain. And the long-term looks great.

That’s about the way I’d sum up Corning’s (GLW) second quarter report released before the opening bell on July 27.

For the quarter just completed–the recent past–the company reported earnings of 39 cents a share versus Wall Street expectations for 32 cents a share. Revenue climbed to $1.395 billion for the quarter. That was an 18% decline from the second quarter of 2008, but a big 41% increase from the first quarter of 2009.

Corning saw strength across its product line with a 66% increase in total LCD glass for TV screens and similar uses from the first quarter of 2009 and a 14% increase in sales from its telecommunications business on growth in demand for optical fiber from China and in North America from the roll out of fiber to the home from companies such as Verizon (VZ). That latter business is getting a boost from a new Corning technology, bendable fiber, that makes it much easier to get optical fiber to homes and businesses.

Gross profit margin climbed to 41% from 27% in the first quarter.

But Corning said that the third quarter, while strong, wouldn’t show anything like the quarter to quarter growth the company saw from the first to second quarter of 2009. Glass shipments in the third quarter, for example, will be flat or slightly up in comparison to second quarter levels, said CFO James Flaws. Read more