Raise a Glass to Corning
By STEVEN M. SEARS / Barrons / June 9, 2012
The company's revolutionary new product—flexible glass—and its low stock price make it a good candidate for selling puts.
Last Monday at an obscure trade show in Boston, Corning engineers announced they had developed flexible glass.
Willow Glass, as Corning calls its invention, is about as thick as a sheet of copy paper. It bends like plastic. A picture on Corning's Website shows a green-gloved hand bending Willow Glass into the shape of an upside-down U.
The malleability, and thinness, of the glass means it most likely will be used to make smartphones and tablets thinner and lighter. The glass can even be wrapped around devices or structures. Already, Corning's Gorilla Glass is used in 750 million devices, including the Galaxy S III smartphone from Samsung (005930.Korea). Apple's (AAPL) iPhones also reportedly use Gorilla Glass. Maybe Corning's customers will use Willow Glass in new devices.
ALTERING THE BASIC NATURE of glass seems like an epic milestone with limitless possibilities. Yet Corning's stock (ticker: GLW) has barely budged since the news was released at the Society for Information Display's meeting in Boston. The yawn shows how little investors think of Corning. Shares are down 3% in the past month, and down 30% in the past year.
The possibilities of Willow Glass, coupled with Corning's somnolent stock price, are alluring. It could take several years for the Willow Glass investment thesis to blossom, but the risk is mitigated by the stock's 2.4% dividend yield. The dividend is dependable. It could be increased.
At around $13, Corning's stock is so inexpensive that it can easily be bought by almost anyone. But investors can enhance the purchase by selling puts.
With the stock at $12.83, investors could sell Corning's January $12.50 put to collect $1.31. If the stock slides below $12.50, and the stock was put to investors, they would buy it at an effective price of $11.19. The stock's 52-week low of $11.51 was set last October. If the stock advances, the money received for selling the put can be kept.
Corning is involved, however, in other businesses besides its so-called display technologies operation, and poor performance in any of those could sour the stock. In 2011, display technologies represented 40% of Corning's sales, even though it is the largest of the company's five main business units. And the unit has some major competitors, including Asahi Glass (ASGLY), Nippon Electric Glass (5214.Japan) and AvanStrate (5220.Japan).
BUYING A STOCK WITH GOOD prospects at a low price always seems attractive. The risk never seems great—but this trade has risks. If Corning's shares turn sharply lower, anyone who sold the put is buying the stock at the put's $12.50 strike price even if the stock is at $5. In January, Corning's stock slid sharply when fourth-quarter earnings revealed glass prices declined.
Business seems to be improving, or at least stabilizing, based on late April's first-quarter earnings. Corning is expected to report earnings July 22, which could provide an important opportunity to highlight how Willow Glass represents a new chapter for the company and smartphones, TVs, and tablets like Apple's iPad.
Even if the Willow Glass trade thesis proves wrong, the sting is offset by Corning's 2.2% dividend yield. In essence, investors can park cash in a relatively low-risk stock whose yield exceeds the 10-Year-Treasury's 1.5%.
Should Corning disappoint investors yet again, shareholders probably will pressure management to use its $3.7 billion cash pile to increase the dividend and buy back shares. The cash equals about 19% of the company's $19.5 billion market capitalization, and spending just a fraction of the cash pile could convince almost any investor that Corning's glass is half full.
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Willow Glass: ultra-thin glass can 'wrap' around devices
BBC News / June 5, 2012
bbc.com
The new glass could be both for rigid and flexible displays
A new type of flexible ultra-thin glass has been unveiled by the firm that developed Gorilla Glass, currently used to make screens of many mobile devices.
Dubbed Willow Glass, the product can be "wrapped" around a device, said the New York-based developer Corning.
The glass was showcased at the Society for Information Display's Display Week, an industry trade show in Boston.
Besides smartphones, it could also be used for displays that are not flat, the company said.
But until such "conformable" screens appear on the market, the glass could be used for mobile devices that are constantly becoming slimmer.
"Displays become more pervasive each day and manufacturers strive to make both portable devices and larger displays thinner," said Dipak Chowdhury, Willow Glass programme director at Corning.
The prototype demonstrated in Boston was as thin as a sheet of paper, and the company said that it can be made to be just 0.05mm thick - thinner than the current 0.2mm or 0.5mm displays.
The firm has already started supplying customers developing new display and touch technology with samples of the product.
Next-gen gorilla glass?
The material used to make Willow Glass is the result of the firm's glassmaking process called Fusion.
The technique involves melting the ingredients at 500C, and then producing a continuous sheet that can be rolled out in a mechanism similar to a traditional printing press.
Corning unveiled Gorilla Glass 2 at CES this year, saying that it will make screens thinner
This roll-to-roll method is much easier and faster for mass production than the sheet-to-sheet process normally used to make super-thin glass, the firm said.
In future, Willow Glass may replace the already widely-used Gorilla Glass, found on many smartphones and tablets.
At this year's CES trade show in Las Vegas, Corning unveiled Gorilla Glass 2, said to be 20% thinner than the original product but with the same strength.
The first-generation of Gorilla Glass, launched in 2007, has so far been used on more than 575 products by 33 manufacturers - covering more than half a billion devices worldwide.
It was first spotted by the Apple founder Steve Jobs, who contacted Corning when the firm was developing the screen for its first iPhone in 2006.
Other developments
Willow Glass is not the first attempt to produce a futuristic flexible display.
During the past few years, scientists around the world have been working with a material called graphene, first produced in 2004 - a super-conductive form of carbon made from single-atom-thick sheets.
Canadian and US researchers developed prototype of a flexible smartphone in 2011
In a past interview with the BBC, a researcher from Cambridge University, Prof Andrea Ferrari, said that prototypes of flexible touchscreens made out of graphene have already been developed - and that besides being ultra strong and flexible, in future such displays could even give the user "sensational" feedback.
"We went from physical buttons to touch screens, the next step will be integrating some sensing capabilities," said Prof Ferrari.
"Your phone will be able to sense if you're touching it, will sense the environment around - you won't have to press a button to turn it on or off, it will recognise if you're using it or not."
In a separate project, scientists from the Human Media Lab at Queen's University, Canada, and Arizona State University's Motivational Environments Research group, created a millimetres-thick prototype flexible smartphone in 2011, made of a so-called electronic paper.
The scientists said they used the same e-ink technology as found in Amazon's Kindle e-book reader, bonded to flex sensors and a touchscreen that interpreted drawings and text written on it.
"This computer looks, feels and operates like a small sheet of interactive paper," said one of the researchers, Dr Roel Vertegaal.
"You interact with it by bending it into a cell phone, flipping the corner to turn pages, or writing on it with a pen." |
