|To: JakeStraw who wrote (2217)||12/16/2011 1:19:56 AM|
|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
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!!
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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|To: Mr. Sunshine who wrote (2223)||3/22/2012 8:58:39 PM|
|Here is the section titled "Legal Proceedings" from GLW's 2011 Annual Report.|
The key points are contained in the last two sentences.
Environmental Litigation. Corning has been named by the Environmental Protection Agency (the Agency) under the Superfund Act
or by state governments under similar state laws, as a potentially responsible party for 18 hazardous waste sites. Under the Superfund
Act, all parties who may have contributed any waste to a hazardous waste site, identified by the Agency, are jointly and severally
liable for the cost of cleanup unless the Agency agrees otherwise. It is Corning’s policy to accrue for its estimated liability related to
Superfund sites and other environmental liabilities related to property owned by Corning based on expert analysis and continual
monitoring by both internal and external consultants. At December 31, 2011 and 2010, Corning had accrued approximately $25
million (undiscounted) and $30 million (undiscounted), respectively, for the estimated liability for environmental cleanup and related
litigation. Based upon the information developed to date, management believes that the accrued reserve is a reasonable estimate of the
Company’s liability and that the risk of an additional loss in an amount materially higher than that accrued is remote.
Dow Corning Corporation. Corning and The Dow Chemical Company (Dow Chemical) each own 50% of the common stock of
Dow Corning. In May 1995, Dow Corning filed for bankruptcy protection to address pending and claimed liabilities arising from
many thousands of breast implant product lawsuits. On June 1, 2004, Dow Corning emerged from Chapter 11 with a Plan of
Reorganization (the Plan) which provided for the settlement or other resolution of implant claims. The Plan also includes releases for
Corning and Dow Chemical as shareholders in exchange for contributions to the Plan.
Under the terms of the Plan, Dow Corning has established and is funding a Settlement Trust and a Litigation Facility to provide a
means for tort claimants to settle or litigate their claims. Inclusive of insurance, Dow Corning has paid approximately $1.7 billion to
the Settlement Trust. As of December 31, 2011, Dow Corning had recorded a reserve for breast implant litigation of $1.6 billion. As a
separate matter arising from the bankruptcy proceedings, Dow Corning is defending claims asserted by a number of commercial
creditors who claim additional interest at default rates and enforcement costs, during the period from May 1995 through June 2004.
As of December 31, 2011, Dow Corning has estimated the liability to commercial creditors to be within the range of $86 million to
$280 million. As Dow Corning management believes no single amount within the range appears to be a better estimate than any other
amount within the range, Dow Corning has recorded the minimum liability within the range. Should Dow Corning not prevail in this
matter, Corning’s equity earnings would be reduced by its 50% share of the amount in excess of $86 million, net of applicable tax
benefits. In addition, the London Market Insurers (the LMI Claimants) claimed a reimbursement right with respect to a portion of
insurance proceeds previously paid by the LMI Claimants to Dow Corning. This claim was based on a theory that the LMI Claimants
overestimated Dow Corning’s liability for the resolution of implant claims pursuant to the Plan. Based on settlement negotiations,
Dow Corning had estimated that the most likely outcome would result in payment to the LMI Claimants in a range of $10 million to
$20 million. During the third quarter, Dow Corning and the LMI Claimants settled the claim for an amount within that range. There
are a number of other claims in the bankruptcy proceedings against Dow Corning awaiting resolution by the U.S. District Court, and it
is reasonably possible that Dow Corning may record bankruptcy-related charges in the future. The remaining tort claims against
Corning are expected to be channeled by the Plan into facilities established by the Plan or otherwise defended by the Litigation
Hemlock Semiconductor Group, of which Dow Corning owns 63%, brought an action against one of its customers to enforce
multiyear supply agreements requiring the customer to purchase or pay for quantities of polycrystalline silicon used in the solar power
industry. Hemlock Semiconductor Group and the customer resolved the dispute during the fourth quarter. The settlement resulted in
Dow Corning recognizing pre-tax income of approximately $420 million for the year ended December 31, 2011, including previously
deferred revenue. After income taxes and amounts attributable to non-controlling interests, net income attributable to Dow Corning
for the year ended December 31, 2011, increased by approximately $177 million from this settlement.
Pittsburgh Corning Corporation. Corning and PPG Industries, Inc. (PPG) each own 50% of the capital stock of Pittsburgh Corning
Corporation (PCC). Over a period of more than two decades, PCC and several other defendants have been named in numerous
lawsuits involving claims alleging personal injury from exposure to asbestos. On April 16, 2000, PCC filed for Chapter 11
reorganization in the U.S. Bankruptcy Court for the Western District of Pennsylvania. At the time PCC filed for bankruptcy
protection, there were approximately 11,800 claims pending against Corning in state court lawsuits alleging various theories of
liability based on exposure to PCC’s asbestos products and typically requesting monetary damages in excess of one million dollars per
claim. Corning has defended those claims on the basis of the separate corporate status of PCC and the absence of any facts supporting
claims of direct liability arising from PCC’s asbestos products. Corning is also currently involved in approximately 9,900 other cases
(approximately 38,300 claims) alleging injuries from asbestos and similar amounts of monetary damages per case. Those cases have
been covered by insurance without material impact to Corning to date. As described below, several of Corning’s insurance carriers
have filed a legal proceeding concerning the extent of any insurance coverage for these claims. Asbestos litigation is inherently
difficult, and past trends in resolving these claims may not be indicators of future outcomes.
Corning, with other relevant parties, has been involved in ongoing efforts to develop a Plan of Reorganization that would resolve the
concerns and objections of the relevant courts and parties. In 2003, a plan was agreed to by various parties (the 2003 Plan), but, on
December 21, 2006, the Bankruptcy Court issued an order denying the confirmation of that 2003 Plan. On January 29, 2009, an
amended plan of reorganization (the Amended PCC Plan) - which addressed the issues raised by the Court when it denied
confirmation of the 2003 Plan - was filed with the Bankruptcy Court.
The proposed resolution of PCC asbestos claims under the Amended PCC Plan would have required Corning to contribute its equity
interests in PCC and Pittsburgh Corning Europe N.V. (PCE), a Belgian corporation, and to contribute a fixed series of payments,
recorded at present value. Corning would have had the option to use its shares rather than cash to make these payments, but the
liability would have been fixed by dollar value and not the number of shares. The Amended PCC Plan would, originally, have
required Corning to make (1) one payment of $100 million one year from the date the Amended PCC Plan becomes effective and
certain conditions are met and (2) five additional payments of $50 million, on each of the five subsequent anniversaries of the first
payment, the final payment of which is subject to reduction based on the application of credits under certain circumstances.
Documents were filed with the Bankruptcy Court further modifying the Amended PCC Plan by reducing Corning’s initial payment by
$30 million and reducing its second and fourth payments by $15 million each. In return, Corning would relinquish its claim for
reimbursement of its payments and contributions under the Amended PCC Plan from the insurance carriers involved in the bankruptcy
proceeding with certain exceptions.
On June 16, 2011, the Court entered an Order denying confirmation of the Amended PCC Plan. The Court’s memorandum opinion
accompanying the order rejected some objections to the Amended PCC Plan and made suggestions regarding modifications to the
Amended PCC Plan that would allow the Plan to be confirmed. Corning and other parties have filed a motion for reconsideration,
objecting to certain points of this Order. Certain parties to the proceeding filed specific plan modifications in response to the Court’s
opinion and Corning supported these filings. Corning and other parties also filed a motion for reconsideration objecting to certain
points in the Court’s opinion and Order. Proposed plan modifications will be discussed during the hearing scheduled for February 17,
The Amended PCC Plan does not include certain non-PCC asbestos claims that may be or have been raised against Corning. Corning
has recorded an additional $150 million for such claims in its estimated asbestos litigation liability. The liability for non-PCC claims
was estimated based upon industry data for asbestos claims since Corning does not have recent claim history due to the injunction
issued by the Bankruptcy Court. The estimated liability represents the undiscounted projection of claims and related legal fees over
the next 20 years. The amount may need to be adjusted in future periods as more data becomes available.
The Amended PCC Plan with the modifications addressing issues raised by the Court’s June 16 opinion remains subject to a number
of contingencies. Payment of the amounts required to fund the Amended PCC Plan from insurance and other sources are subject to a
number of conditions that may not be achieved. The approval of the (further modified) Amended PCC Plan by the Bankruptcy Court
is not certain and faces objections by some parties. If the modified Amended PCC Plan is approved by the Bankruptcy Court, that
approval will be subject to appeal. For these and other reasons, Corning’s liability for these asbestos matters may be subject to
changes in subsequent quarters. The estimate of the cost of resolving the non-PCC asbestos claims may also be subject to change as
developments occur. Management continues to believe that the likelihood of the uncertainties surrounding these proceedings causing
a material adverse impact to Corning’s financial statements is remote.
Several of Corning’s insurers have commenced litigation in state courts for a declaration of the rights and obligations of the parties
under insurance policies, including rights that may be affected by the potential resolutions described above. Corning is vigorously
contesting these cases. Management is unable to predict the outcome of this insurance litigation and therefore cannot estimate the
range of any possible loss.
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|To: John Hayman who wrote (2222)||3/26/2012 8:55:43 PM|
|From: Mr. Sunshine|
|John, thanks, Corning must be employing a whole graduating class of lawyers. I assume the liability risk is not as drastic as it sounds, but you can bet that when those issues are resolved, even if not entirely in GLWs favor, the stock will spike as the uncertainty is removed.|
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