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Technology Stocks : Corning Incorporated (GLW)
GLW 38.75+4.0%Jun 17 4:00 PM EDT

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From: Asymmetric12/26/2014 12:58:26 PM
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Corning Watch: Growing Corning Inc. with acquisitions
LARRY WILSON, Correspondent 10:06 a.m. EST December 4, 2014

Corning Inc., the region’s largest employer, is growing with a series of acquisitions.(Photo: SIMON WHEELER / STAFF PHOTO)

There are a number of ways to expand a corporation like Corning Inc.

You can buy products you’ve never made before along with the technology to manufacture them. That was the basic strategy the Twin Tiers’ largest employer used in the 1990s to build huge businesses in medical blood testing and pharmaceutical development.

After proving to be more trouble than they were worth — in part because of complex government regulations — both businesses were dumped and Corning went back to its roots in glass.

Another way to expand is to grow sales of existing products without acquisitions. Corning Inc. has tried this method with products such as liquid crystal display glass, Gorilla Glass and optical fiber and cable.

Such “organic” growth is usually slow, except when a product gets hot for a short period of time. That has happened with several Corning products, all of which eventually cooled to more realistic levels. Among them: optical fiber, display glass and Gorilla Glass.

A third way to expand a corporation is to acquire businesses already related to successful products.

This seems to be the route that the Fortune 500 company has chosen.

Its largest recent acquisition came in the display glass business earlier this year. Corning bought out the interest of its Korean partner in Samsung Corning Precision Glass. That gave Corning Inc. a better foothold in Asia, a potentially high growth area for computer and television displays.

The $2.3 billion acquisition, which Corning financed by issuing new shares of preferred stock to Samsung, closed in January. It is expected to help drive Corning revenues to record levels this year.

On the heels of the Samsung display glass deal, Corning announced on Dec. 2 it will buy Samsung’s optical fiber business. The terms of the sale were not disclosed, but it is significantly smaller than the display glass deal and will produce significantly less revenue.

Its advantages are that it gives Corning increased access to the optical fiber markets in Korea and China, both of which have significant growth potential.

The two deals with Samsung followed Corning Life Science’s acquisition in 2012 of the majority of the Discovery Labware business of Becton Dickinson and Co.

The deal added new plastic consumable labware brands and other products to Corning’s existing portfolio.

The three deals done since 2012 in life sciences, display glass and optical fiber show that Corning Inc. has chosen augmenting existing product lines as its major strategy for growth. It will be a few years before the success of that effort can be accurately measured.
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