Corning Is No Glass House

Corning demonstrates a touch-screen wall made of its Gorilla Glass at a Corning, N.Y., facility.

Photo:

Victor J. Blue/Bloomberg News

Sept. 18, 2019 6:30 am ET

Corning


GLW -6.06%

was the subject of two news releases in a 12-hour period. Investors focused on the first, but the second merits some attention. In the first late Monday, Corning cut its third-quarter projections for two of its largest business lines. The company said its display segment is being hit by reduced orders by TV manufacturers, while its optical-communications unit has been hurt by reduced capital spending by wireless carriers on projects such as fiber to the home. In the second release Tuesday morning,

Apple

Inc. announced that it has awarded Corning another $250 million from its Advanced Manufacturing Fund, which invests in U.S.-based manufacturers.

The display and optical units together typically account for about two-thirds of Corning’s total revenue. The company didn’t give specific numbers in its update, but Wall Street analysts trimmed their third-quarter revenue projections for the company by an average of 3.6% in response to the warning, according to FactSet. Corning shares closed down 6% Tuesday. The Apple news was largely shrugged off. Granted, it was Corning’s second such infusion from one of the world’s richest companies, which invested $200 million in 2017. The latest investment also represents about one-quarter of Corning’s annual research-and-development bill, which doesn’t exactly make it a game-changing amount.

But Apple’s commitment does serve as a reminder that the company that developed the glass for Thomas Edison’s first lightbulb still has some tricks up its sleeve. Corning’s Gorilla Glass has been a regular feature on the iPhone’s screen since its inception, and the latest models ramp up the use case further by adding the rugged glass to the back of the device to enable wireless charging. Managing a profitable, long-term relationship with the demanding iPhone maker is no small feat. And many of Apple’s rivals also use Gorilla Glass, which has helped Corning’s specialty glass segment—which is distinct from the display segment—average 19% annual growth over the past 10 years. Over the past 12 months, it took in $1.5 billion of revenue. Tuesday’s selloff dropped Corning’s stock to around 15.5 times forward earnings—the low side of its three-year range. Wall Street expects growth in the company’s other business units to offset the weakness this year in optical and display, while demand driven by data centers and 5G networks should help in the longer term. And the continued quest among smartphone makers for unbreakable screens should keep Corning from cracking much further. Write to Dan Gallagher at dan.gallagher@wsj.com

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