| From: Asymmetric | 11/2/2011 11:09:58 PM | | | | | | Corning Director's $462,000 Buy
By GRACE L. WILLIAMS / Barrons / Nov 2, 2011
John J. Canning bought 30,000 shares of the glass giant. A recent multiyear low and uncertainties about the coming year for the glass industry hasn't stopped insiders at Corning from seeing the rose-colored side of the company and proving their confidence by buying up shares.
On Oct. 27 and 28, director John J. Canning, Jr. bought 30,000 shares of Corning (ticker: GLW) for $462,000, an average of $15.40 each. This is his first transaction at Corning in 2011. Canning bought 20,000 shares of the glass giant for $383,200, an average of $19.16 each, on Aug. 5, 2010.
Following his recent transaction, Canning directly owns 67,873 shares of Corning, a stake of less than 1%.
Canning has been a director at Corning since 2010 and is co-founder and chairman of Chicago-based investment firm Madison Dearborn Partners, LLC.
Sean MacNeal, an analyst for InsiderScore.com, says, "This is an interesting buy in that given Canning's background at Madison Dearborn, his pedigree makes you want to take more notice. I like the fact that it followed up the Chief Financial Officer's purchase in August which was also actionable."
On Aug. 10, CFO James B. Flaws bought 65,000 Corning shares for $876,600, an average of $13.49 each, and followed up the next day by buying 10,000 additional shares for $137,700, an average of $13.77 each. The buys lifted his direct holdings to 270,382 shares.
"When Corning announced its buyback [during the summer], the CEO called the shares undervalued. He's saying it, other insiders are stepping up to back him and someone with Canning's background is good. It's a nice little purchase for Canning," says MacNeal.
Shares skidded to a multiyear low of $11.51 each on Oct. 4, a number it last saw in March 2009. Corning has rebounded since then, closing at $13.96 on Wednesday.
On Oct. 26, Corning's third-quarter earnings topped expectations but that didn't necessarily impress the Street.
Jefferies analyst George C. Notter maintained Corning at Hold with a price target of $15.75. Earnings topped Jefferies' expectations, but the outlook for the display business in the fourth-quarter was "so-so," Notter wrote in a research report. "Incrementally, we have some creeping concerns about the competitive environment in the glass business longer term. Without an obvious fundamental catalyst, we think the shares will remain range-bound over the intermediate- and longer-term," wrote Notter. |
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| From: Asymmetric | 11/13/2011 12:21:33 AM | | | | | | A Glass Act on the Cheap
By SANDRA WARD / Barrons Nov 12, 2011
Corning's wares have become the face of consumer electronics, from TVs to tablets. But its shares have practically dropped from sight. Why they could do smashingly well.
Shattered by falling sales of televisions and personal computers, shares of specialty-glass maker Corning have dropped 20% since the start of the year, and now trade at levels last seen during the height of the worldwide financial crisis in late 2008 and 2009.
Then as now, the makers of flat panels, to which Corning supplies glass, drastically cut back on inventories and reduced production levels at their plants in response to an uncertain economic environment that has hindered consumer spending and hurt pricing. The flat-panel makers are taking their cue from the television makers.
Corning shares (ticker: GLW) performed well through the early part of this year, much as a bullish piece in Barron's last December predicted ("Corning's Winning App for the iPad," Dec. 13, 2010). But euro-zone financial woes, fears of a double-dip recession and the protracted budgetary stalemate in Washington this past summer have undermined business and sent the stock tumbling from a first-quarter high. A revival could now be in order.
About 85% of Corning's profits are tied to the display glass typically found in TVs and personal computers, as well as smartphones and tablet computers, even though the segment accounts for only 45% of revenue.
The company's other businesses include fiberoptics for telecommunications; emission controls for light-duty, gasoline-powered vehicles and diesel-powered cars and trucks; specialty glass–known as Gorilla glass—that's thin and durable and used for smartphones and tablets, and glassware, such as Pyrex, used both in scientific laboratories and in cookware.
At a recent$15 a share, Corning, the world's leading maker of specialty glass, carries a stunningly low price/earnings multiple of 7.9 times 2012 estimated earnings of $1.89 a share. The share price is only slightly higher than the company's book value of $13.79 a share.
That's quite a comedown for a company that posted $2.1 billion in sales in the third quarter, a 30% increase from the year-earlier period, with all segments posting double-digit percentage growth. Gross margin expanded to about 47% from 44.3%, and Corning beat earnings expectations for the period by posting net income of $811 million, or 48 cents a share, excluding special items. Analysts had been expecting earnings of 42 cents a share, down from year-ago profits of $785 million, or 51 cents a share.
Gorilla on the Loose
Corning's thin, light and durable Gorilla glass is playing a key role in the smartphone revolution. So why is its stock at the lowest level since the financial crisis?
Recent Price $15.00
52-Week Hi-Lo
$23.43-$11.51
Mkt Value (bil) $24
EPS 2012E $1.89
PE 2012E 7.9
EPS Growth '11 vs '12 2.7%
E=Estimate
Source: Thomson Reuters
At the time results were released, Corning Chairman and Chief Executive Wendell Weeks asserted the company is "well-positioned" to reach its goal of $10 billion in sales "within the next several years." Also, Chief Financial Officer Jim Flaws predicted retail demand would rise next year, "potentially in the double-digit range again." With inventories at historic lows, higher demand from consumers would set the stage for stronger order demand for glass.
Signalling its optimism about Corning's prospects, the company's board of directors recently approved hiking the annual dividend by 50%, to 30 cents a year, from 20 cents, which brings the dividend yield to more than 2%. It also authorized a stock buyback plan of up to $1.5 billion in shares through 2013, with purchases beginning in the current quarter.
Corning can well afford to give a little extra to shareholders: The company has $4 billion in net cash on its balance sheet, and expects to be generating $7 billion in free cash flow by 2014, up from $2.8 billion last year.
"We believe our future free-cash-flow prospects are excellent, driven by business performance and lower capital spending starting in 2012, as some major projects are finished," CEO Weeks said in announcing the action to enhance shareholder returns. "In our opinion, the company's current stock price represents a significant discount to the real value of Corning's businesses."
THE BOARD'S MOVES HAVE SUPPORTED shares of Corning, whose market value is $24 billion. The stock is up 15% since Oct. 5, when the board actions were announced.
Board member John A. Canning Jr., a managing director and co-founder of Chicago-based private-equity firm Madison Dearborn Partners, gave his endorsement to the stock when he bought 30,000 shares in late October for a total of $462,000, or an average price of $15.40 a piece. In August, CFO Flaws ponied up more than $1 million to buy 65,000 shares at an average of $13.49 each, and another 10,000 at about $13.77 a share.
Shattering Expectations
Corning posted $2.1 billion in sales in the third quarter, a 30% increase from a year earlier; all segments had double-digit percentage growth.
"It's very attractive," analyst Darice Liu of Brigantine Advisors says of Corning's stock, noting that long-term fundamentals are strong and the valuation is compelling. She sees the shares possibly hitting 18 in the next year, a gain of nearly 20% from current levels.
"The supply chain is so tight, that when panel makers pull the trigger and increase utilization and productivity, you'll see an immediate positive impact," says Liu.
Corning was the only stock added in the third quarter to the $5 billion Oakmark Fund, which is dedicated to investing in large-cap companies that are trading at discounts to their intrinsic value; the fund is managed by longtime value investor William Nygren. He bought Corning stock at $13 a share, below book value and at less than seven times earnings.
Nygren points out that in 2000, at the height of the technology, telecommunications and media boom, Corning earned $1.23 a share on the strength of its fiberoptics business, and its stock traded at 113.
That was one extreme, but now the shares have swung too far in the other direction. Last year, driven by a boom for LDC TVs in Japan and China, Corning earned more than $2 a share. It is expected to earn $1.84 a share this year.
NEAR-TERM PRICING PRESSURES in the glass-panel market are weighing on the shares. Corning expects to lower prices this quarter to a greater extent than it has in previous quarters, as a response to excess capacity and to maintain market share. By the end of the fourth quarter, however, the company expects inventory levels in its end-markets to fall below 14 weeks' worth of supply, down from the 17 weeks early in the third-quarter.
The Bottom Line
With inventory levels low now, TV makers will quickly need lots of glass when consumer demand picks up. That could lift Corning's stock by 20% or more.
The television market is the most critical segment for Corning, because of the high square-footage of glass required and the numbers of televisions sold.
With the approach of the holiday season, which now extends well into the first quarter to include Chinese New Year, in addition to the Christmas and Hanukkah celebrations in the fourth quarter, prices for liquid-crystal display (LCD) panels are showing signs of stabilizing after declining steadily since July. That's according to Display Search, a global market-research and consulting firm that's part of NPD Group, a retail-trend tracker. Prices in November were flat with October's.
"The indications are that there will be pretty aggressive pricing for the holidays, and that could drive volume and be a positive for industry growth," said Paul Semenza, senior vice president at Display Search. "The risk is [inventories] are too lean. If demand spikes, inventories wouldn't be adequate." That's a risk Corning investors might happily take. |
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| To: JakeStraw who wrote (2217) | 12/16/2011 1:19:56 AM | | From: Asymmetric | | | | How Corning marketed a product no one really sees
SIMON HOUPT - The Globe and Mail
This is a story about how a gorilla taught some engineers to speak like human beings.
In the summer of 2010, senior management at the industrial glass company Corning Inc. realized they had an opportunity to create something entirely new. That in itself wasn’t unusual: For more than 160 years, the company’s laboratories has pushed the envelope of material science, creating high-tech if unglamorous products like fibre optic cable. This new development, though, would take place outside the company’s tightly controlled labs, in the unpredictable world of consumer marketing.
For about a year, Corning had been selling something called cover glass to consumer electronics manufacturers. As streaming video became more widespread, smart phones and tablet computers have begun using cover glass to provide better clarity and more resistance to shocks and other damage. In 2009, Corning had sold about $43-million of its cover glass. By the middle of 2010, sales were projected to hit about $250-million.
They called the product Gorilla Glass, and they thought that if they marketed it correctly, it could become a valuable consumer brand. “We wanted you as a consumer to go in to an electronics store and say, ‘I want to see the cellphones that have Gorilla Glass.’ That was the strategy,” says Daniel Collins, Corning’s vice-president of communications. “So we went beyond our customer, to our customer’s customer. We also wanted to make cover glass in essence – and therefore Gorilla Glass – the industry standard.”
The only problem was that Corning hadn’t marketed to consumers in more than a decade. It didn’t know how to talk to them. It didn’t even have a formal marketing department. Its New York-based ad agency, Doremus, specializes in business-to-business communications.
Oh sure, for decades, Corning’s sturdy cookware had been a much beloved consumer brand. But in 1997, with the company shifting its focus to the business market, it sold off the line to World Kitchen Inc. and closed its consumer marketing department. Marketing products like optical fibre to wireless and cable companies is a wholly different animal. In that context, says Mr. Collins, “A product is really a component. We make optical fibre, but it is encased in cable and buried in the ground.”
Doremus developed a campaign that would focus on the attributes Corning felt would most appeal to consumers, boiled down to the tagline: “Tough yet beautiful.”
The campaign is an example of something called “ingredient branding,” the practice of creating a consumer-friendly image for an internal component that normally would go unseen or unnoticed by people buying a finished product. Ingredient branding isn’t new – it stretches back decades, and includes campaigns about pink fibreglass and Teflon on cookware – but it is becoming more commonplace.
In the 2010 book Ingredient Branding: Making the Invisible Visible, Philip Kotler, a professor of marketing at the Kellogg School of Management, notes there are a number of conditions that must be met if branding a component is going to be successful: It has to be highly differentiated (he cited Gore-Tex as an example); it must be central to the functioning of the product; the company selling the finished product has to invest in marketing the component; branding the component helps the final product stand out from similar products; and the final product is complex and assembled from many components supplied by multiple firms.
Corning had a nifty precedent to follow – another high-tech company that learned the trick of speaking to consumers.
In the mid-1980s, after the computer-chip maker Intel had its application for a trademark on its “386” chip turned down, executives recognized they had to figure out a way of differentiating their product to protect it from becoming commoditized. So, in 1991, they launched the “Intel Inside” co-operative marketing campaign, supporting their customers’ ad buys while at the same time securing a sliver of space in those ads directed at consumers. It was a hugely risky move: As Prof. Kotler’s book points out, Intel’s annual sales were only about $500-million (U.S.), but they threw $110-million into their consumer campaign over the course of three years.
By all measures, it was a success, boosting awareness of Intel among consumers from about 24 per cent to about 95 per cent only a few years later. The strategy was studied and copied around the world, but the case held a cautionary tale: Some experts believe the desktop maker IBM failed to reap much economic benefit from having Intel chips in their personal computers. And the branding success gave Intel greater leverage in negotiations.
Which may be why some marketers prevent Corning from acknowledging that Gorilla Glass is used in their products. Still, Corning is selling the product to more than 20 different brands, which used it in more than 400 products, including Sony’s high-end Bravia television, Samsung’s Galaxy tablet, Motorola’s new Razr phone, and Lenovo ThinkPads.
All are now noting – either buried in their spec sheets or boasting in voiceovers – that they use Gorilla Glass.
Corning launched its consumer campaign in late 2010 with a trio of ads featuring a gorilla using high-tech products as part of his day: a cellphone, or a TV built into a fridge door. The ads weren’t tested, Mr. Collins says. For that matter, neither was the name itself. “No, it was just something that stuck, and when we began to look at it we started to think, ‘What are the attributes of the product itself? And those are in the advertising: In many ways a gorilla evokes strength, toughness, but it also has a personal appeal – a human side to it if you will – which we thought played with the beauty, the elegance.”
Corning added a pair of slow-motion spots to its YouTube channel in the spring of 2011, demonstrating the strength of the glass: In one, a baseball shot at a narrow sheet of glass bounces off it like rubber off cement. In another, it’s a bowling ball.
The company has spent an estimated $15-million on media buying for its campaign in the past 13 months – a tiny amount for a brand hoping to lodge itself in consumers’ consciousness. But they say internal research shows people are starting to ask for Gorilla Glass.
In early October, Corning made a $25,000 contribution to the Dian Fossey Gorilla Fund International, in support of the organization’s efforts to protect the animals and their habitat in Africa.
Sales of Gorilla Glass for 2011 are projected to be almost three times last year’s levels, landing somewhere between $700-million and $750-million. |
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| From: Asymmetric | 1/15/2012 2:54:05 AM | | | | | | Corning Looks to Break the Gorilla Glass Ceiling
By SUZANNE MCGEE, The Fiscal Times January 12, 2012
thefiscaltimes.com
Can a gorilla get the monkey off of Corning’s (GLW) stock?
That’s certainly what the venerable manufacturer of glassware and related products is hoping, just as a decade ago it counted on fiber-optics to revive its fortunes. The “gorilla” in question is actually the second generation of Corning’s Gorilla Glass, introduced as a tough and scratch-resistant glass that makers of smartphones, tablets and other consumer electronic gadgets can use to make their own products more appealing to consumers.
Around Thanksgiving, Corning cut its forecast for its fourth-quarter earnings, partly because of a slump in demand and prices for liquid-crystal display glass and because a South Korean customer walked away from a contract to purchase products from Corning. But at the same time, the company slashed its forecast for sales of the original Gorilla Glass, predicting sales would fall 25 percent over previous year’s levels, compared to its previous outlook for a 15 percent decline.
Will a new version of Gorilla Glass be enough to revive the company’s earnings, not to mention its stock price? Since Corning only unveiledthe product to potential customers at this week’s Consumer Electronics Show in Las Vegas, it’s too soon to tell. It is thinner and lighter, Corning claims, without losing any of its strength.
That means that customers could produce thinner devices themselves – the kind of ultra-light weight smartphones, tablets, e-readers and other gizmos consumers covet most – without sacrificing anything in terms of sensitivity to touch or image clarity. Acer, Asus and Microsoft (MSFT) will be using Gorilla Glass 2 in some new devices, but Corning needs other device makers to jump on board as well.
At the end of the day, however, it all boils down to the consumers themselves. Are they ready to replace year-old devices with thinner, lighter-weight versions offering higher-quality images – or will they opt to just make do and save money?
One of the reasons for the slow and steady slide in Corning’s stock price last year was that consumers were reluctant to shop – except when offered big discounts. While consumers are still hyper-sensitive to bad macro news (stubbornly high unemployment rates, the prospect of Europe’s crisis leading to another recession), same-store sales did do better than many pundits had expected in December, and luxury retailers did better than most. So consumers, while still value-conscious, do seem to be willing to open their wallets and spend to acquire new gadgets as long as it’s clear to them that these gadgets are also of higher quality.
Absent an economic crisis or other macro-level setback, it seems clear that Corning’s share price could respond quickly to any good Gorilla Glass news. The stock, up 6 percent since Friday’s close, has outperformed the Dow Jones Industrial Average and the S&P 500 since the product was launched this week while still hovering not far off its 52-week low of $11.51. (It closed at $14.32 yesterday, up 2.4 percent.)
The company is scheduled to report its fourth-quarter earnings January 24, and now that its bearish revision of sales guidance has been processed, all analysts but one are recommending the stock as a hold to an overweight or buy. (The median forecast is for the stock to rise to $18 a share; the highest price target is a whopping $24.)
Corning recently boosted its dividend payout – a sign that it’s quietly confident about its future prospects. If the company’s stock price slumps in response to earnings, that may be an opportunity to bet that the gorilla – or rather, Gorilla Glass 2 – may provide the impetus that’s required to revive the company’s fortunes. |
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| To: Mad2 who wrote (2221) | 3/12/2012 9:01:03 AM | | From: John Hayman | | | | Well, that's good that they are buying, but.....the stock could be in the single digits. I hope it turns here, but not expecting it too.
Good company, but needs something for it's stock price!!
John
go glw, long the stock |
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| To: Mad2 who wrote (2221) | 3/22/2012 5:39:26 PM | | From: Mr. Sunshine | | | | | Read that GLW is a defendant in an asbestos related class action lawsuit and that they have a lot of unfunded pension liabilities. Does anyone know if this is true, and how much these potential hits would be? Perhaps that is holding the price down. |
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