Corning (GLW) is a very interesting situation situated at the far end of the supply chain (very close to the end consumer) - it has been posting some positive data points the past few months but what does it tell us overall? The tech sector has been the one area of sustained domestic out performance for the 1st half of 2009 - some of this is due to stronger than average balance sheets (high cash, low debt), some of it is due to "playbook" - especially in the semiconductor space. When you believe the economy is turning around one of the early cycle sectors you run into (en masse) is semis...

So while the world was in a cocoon like state from fall 2008 to mid winter, inventories were drawn down and orders fell off a cliff in most areas of the economy, including most of the "technology" space. Now the big arguement is whether this "restocking" cycle that in retrospect has been happening the past 2-3 months is a 1x event to make up for the cocoon stage, or the first signs of re-accelerating global growth. And how much is do to government transfer payments to its citizens, and how much is pure demand. Without making an arguement one way or the other - let's look at Corning; which is not a "semi" stock, but perhaps might be a similar type of indicator.

Corning Incorporated manufactures and processes specialty glass and ceramics products worldwide. It operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences.

While there are 5 business segments, Corning is basically 2 major business lines which make up 75% of sales: (1) "display" (LCD that go into TVs and computers) and (2) telecommunication - fiber optic product of all types. Even more importantly perhaps is 50%+ of sales now come from Asia, so much like an International Business Machines (IBM), or Yum! Brands (YUM) - what we think of as an "American company" is really being driven by sales overseas.

So along with the restocking question, we have to decipher if any company / sector specific growth is due to stable (or stimulus happy) parts of Asia, or if its part of a bigger mosaic of worldwide recovery. All good questions which will only be answered full when we look back in a year and have 20/20 hindsight as our friend.

But for now, the Chinese - especially those of the TV buying kind - seem to be driving Corning's sales surge. What is interesting over and above the news is the stock reaction. Again, it is NOT the news but the REACTION to the news that matters - Corning announced this uptick in sales yesterday morning but the stock traded down on the day.