(By Balaseshan) Corning Inc. (NYSE: GLW) reported a 36% drop in quarterly earnings due to lower sales from most of its segments. Earnings and revenue exceeded Street's expectations.
However, due to economic headwinds, the specialty glass maker is likely to implement selected cost reductions, including modest job cuts. Following the news, shares fell 4.62% in premarket.
Earnings per share for the third quarter fell 31% to $0.35. Excluding special items, earnings per share declined to $0.34 from $0.48.
Sales decreased 2% to $2.04 billion.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.32 per share on revenue of $2.02 billion for the third quarter.
Specialty Materials sales were up 21% year over year, driven by strong growth in Corning Gorilla Glass volumes, and much higher than expected. Telecommunications sales decreased 7% year over year, driven by lower sales in North America and Europe, partially offset by growth in China.
Sales in the Display Technologies segment were down 6% year-over-year. Glass price declines for LCD were moderate, as expected.
Environmental Technologies segment sales were down 6% year-over-year. Following the summer's seasonal manufacturing shutdowns, higher light-duty diesel product sales were offset by lower sales of heavy-duty diesel filters and substrates.
Dow Corning Corp.'s equity earnings were down 46% on a year-over-year basis, driven by severe weakness in the solar polysilicon market.
Looking ahead into the fourth quarter, the company said the weakening economy is affecting sales in many of its businesses, with several not achieving the growth expectations it set for the year. Corning believes these economic headwinds will persist next year.
"In order to deliver on our plan to grow earnings, we are likely to implement selected cost reductions in the areas of project spending, capital expenditures, and fixed costs, which may include modest headcount reductions," said James Flaws, vice chairman and chief financial officer.
Once the restructuring plan is determined, the company anticipates taking a pretax charge of up to $50 million in the fourth quarter to cover the cost of that restructuring.
"We are executing our strategy to improve profits and deliver new growth opportunities, despite these challenges. These positive prospects, combined with Corning's continuing strong operating cash flow and declining capital spending, gave the board of directors confidence to increase the company's dividend payout by 20% earlier this quarter,' said Flaws.
GLW closed Tuesday's regular session at $13.41. The stock has been trading between $10.62 and $15.75 for the past 52 weeks.