Corning (NYSE: GLW) Raises Guidance For 2nd Time In 5 Weeks Due To.... What Else? China

By: TraderMark Wednesday, July 01, 2009 1:37 PM

Symbols: GLW, IBM, YUM

Hence, one might assume the good news is already "baked" into the stock.

Let's delve deeper into the actual upside and drivers.

Corning (GLW) CFO James Flaws this morning said in a statement that second-quarter glass demand “is much stronger than we anticipated even a few weeks ago.” He says the company now sees Q2 sequential volume up about 100% in its wholly owned business. That is up from an original forecast of 50% growth, which had been revised up to more than 75% at the end of May.
Flaws noted that the company met much of the improved demand by drawing down inventory, but that has it also has begun shipping glass from melting tanks restarted earlier in the quarter.
Flaws second quarter prices were “moderate,” with smaller price declines than in Q1. He says Q2 supply chain inventory is about even with the start of the year, which he says is a positive sign.
Driving demand is continued strong demand for LCD televisions. He notes that April LCD TV sales were up 22% in Europe and 77% in China. In May, he says, LCD TV sales were up 48% in Japan. In the U.S., growth slowed in April, but he says “reports that we have received indicate a significant upward spike in domestic LCD TV sales in late May and the first three weeks of June.”

So why the "eh" reaction in the stock?

Share reaction was muted, however, as analysts said investors had expected the move by Corning and were concerned that the improvement in demand might be short-lived.
"To some extent investors fear a repeat of what happened in 2008 when Corning was bullish in the first half but saw a fall off in demand for glass in the second half," said Morgan Keegan analyst Paul Bonenfant, but added that he did not agree with that view.

This will definitely be one of the stocks to watch in the 2nd half 2009 due to its extremely cyclical nature.

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