|To: Asymmetric who wrote (2234)
|3/16/2014 12:40:08 PM
|Review: Corning's Thunderbolt Optical Cable
By Mikey Campbell / Apple Insider / Apple Insider
Already in its second generation, the Thunderbolt I/O protocol has been around for three years, but only recently did manufacturers begin production of optical cables to deliver the tentpole feature of long-distance data transfer. AppleInsider was able to test out this highly anticipated addition with Corning's 10m all-optical Thunderbolt cable solution.
After months of development, glass manufacturing giant Corning — which produces the Gorilla Glass used by Apple in its iOS product line — was first to bring an optical Thunderbolt cable to market late last year. With Optical Cables by Corning, the promise of long-distance high-speed interconnects, touted since the first-generation Thunderbolt-equipped computers hit store shelves in 2011, has finally been fulfilled. <snip>
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|3/27/2014 12:14:13 PM
|Corning Still an Up-and-Comer
A multiyear TV-replacement cycle will boost earnings power.
Corning (GLW: NYSE)
By Susquehanna Financial Group ($20.06, March 26, 2014)
We are increasing estimates and the price target on Corning, and upgrading shares to Positive from Neutral.
Recent industry data points and Taiwan/Korea meetings last week have all been positive for Corning's GLW) TV operations, attributed to an improving economy/declining 4k2k (ultra-high-definition) premiums. We also hosted management meetings in New York Tuesday, with takeaways supportive of stronger earnings-per-share/free-cash-flow growth.
We are therefore increasing estimates and the price target and upgrading, despite Corning stock at a 52-week high. We argue share appreciation the past six months has had more to do with accelerated buy backs. And improving fundamentals should help with more upside from here especially as earning power improves (fueled by a multiyear TV-replacement cycle, margin expansion) while there is incremental confidence on free-cash-flow margin of 15% to 20%. The glass industry could also consolidate given poor balance sheets among competitors, helping with multiple expansion (recall the semiconductor-memory industry!). We are not as concerned on [manufactured] sapphire [a product that competes with Corning's Gorilla Glass] as we are with exchange rates though Corning is hedged through first-quarter 2015.
Given our revised view on fundamentals, we are using this opportunity to increase the calendar 2014 EPS estimate from $1.42 to $1.50 (consensus estimate is $1.45). Additionally, given our view that this is a multiyear TV-replacement cycle, we are using this opportunity to introduce our calendar 2015 EPS estimate of $1.75 (consensus estimate is $1.63). This has led us to increase our price target from $15 to $25, which is based on 14 times estimated calendar 2015 EPS, three times enterprise value (EV)/sales, nine times EV/earnings before interest, taxes, depreciation and amortization (Ebitda) and 1.7 times current book value.
The stock has over the past five years traded in a range of seven times-15 times forward price/earnings. The closest peer groups (LG Chemical [of Korea], Asahi Glass [of Japan]) are currently trading at 15 times forward price/earnings, one times EV/sales, five times forward EV/Ebitda and one times book value. We note Corning as of fourth-quarter 2013 had a net positive cash per share of $1.36 versus negative $4 for Asahi and negative $15 for LG Chemical.
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|To: John Hayman who wrote (2232)
|3/30/2014 6:12:53 PM
|Forget Sapphire: Should Corning, Inc. Be More Worried About Plastic OLEDs?
By Steve Symington / The Motley Fool March 28, 2014
Ever since GT Advanced Technologies (GTAT) signed a deal to supply sapphire material to Apple last November, the market has been flooded with speculation regarding exactly what the folks in Cupertino might be planning.
One of the more popular theories is that sapphire -- which is impossibly hard and nearly as scratch-resistant as diamond -- could eventually serve to replace Corning's Gorilla Glass as the protective cover of choice for Apple's various mobile devices.
While I've already made it clear I don't think that'll happen anytime soon, Corning management has still had their hands full of late rebutting pro-sapphire arguments while extolling the virtues of Gorilla Glass.
Here's an even bigger threat
But what would happen if a technology came along to render the glass portion of electronic displays unnecessary?
Wouldn't you know it, this tech already exists in the form of plastic-based organic light emitting diodes -- or, as they're more popularly known, P-OLEDs.
Plastic OLED prototypes from LG Display and Samsung. Source: LG Display/Samsung.
By mounting an OLED display on a plastic substrate, it can be made flexible and virtually unbreakable -- even able to withstand multiple strikes from a hammer. That's something neither Corning's products nor sapphire can offer.
Through license and material supply agreements with OLED specialist Universal Display (OLED) , regular OLEDs are already pervasive in today's market by their inclusion in Samsung's Galaxy series phones and tablets. In addition, both Samsung and fellow UDC customer LG Display (NYSE: LPL) have already introduced curved OLED televisions and smartphones to showcase OLED's early design possibilities.
Breaking the glass trend
However, each of the commercially available mobile OLED devices we've seen so far has used at least one of Corning's products for various purposes. These not only include Gorilla Glass as the protective cover, but also Corning's lesser-known Lotus Glass, which can be used for multiple purposes including the backplane, the touch sensor/barrier layer, and encapsulation to protect the OLED material from harmful outside elements.
Corning's ultra-slim, flexible Willow Glass can also be used to coat the otherwise-rigid touch sensor, but even then, it still wouldn't be considered unbreakable.
For now, entirely plastic-based devices seem to exist only as prototypes like the one Samsung demoed at last year's Consumer Electronics Show:
Even so, it appears the industry is continuing to make strides toward doing away with glass over the long run.
Back in January, for example, Samsung reportedly treated VIP attendees at this year's CES to a peek at a new foldable, plastic-based OLED smartphone featuring a flexible metal mesh touch sensor. While those reports stated Samsung was still ensuring the device would stand up to the thousands of folds a typical user would put it through, it could mean Samsung has found a viable alternative to using today's glass-coated ITO touch sensors.
What's more, Universal Display and LG Display have each developed their own proprietary flexible OLED encapsulation technologies. Samsung, for its part, appears to be evaluating competing encapsulation solutions from both Universal Display and manufacturing equipment specialist Veeco Instruments.
Finally, remember that earlier this year LG Display was rumored to have signed an exclusive agreement to supply 1.52-inch, flexible P-OLED displays for Apple's upcoming iWatch product. If that's true, Apple's long-awaited acceptance of OLED could spur the start of a broader movement toward flexible displays.
Corning might have an answer
Don't get me wrong; this doesn't mean Corning will sit back and let one of its more promising growth drivers fade away.
Just last month, Jim Clappin, president of Corning Glass Technologies, contrasted the manufacturing advantages of Willow Glass with the potentially wasteful methods employed with plastic displays:
Some device makers have pursued plastics as a path to achieve thinner displays. But use of plastic as a backplane substrate presents other challenges and trade-offs. Plastic substrates used a glass carrier to run through the panel making process and with the current technology, the carrier's lost after de-bonding. [...] On mature reusable carrier, Willow Glass can be processed using current panel manufacturing techniques. Once the backplane and color filter have been built on the Willow Glass surface and joined together the cell is then debonded from the carriers and carriers can be returned for reuse.
If you're having trouble picturing the process he described, here's graphical look provided by LG Display last month:
Source: LG Display.
In short, by allowing the carrier glass to be reused, Willow Glass could both save manufacturers money and improve their environmental footprint -- that is, at least, assuming plastic manufacturing capabilities don't evolve to save that carrier and negate his argument.
In addition, given Gorilla Glass' relative inflexibility, Willow Glass could also eventually be used not just as a substrate, but also as a new flexible cover material. This could allow Willow Glass to provide some level of scratch resistance, which simply couldn't be rivaled by plastic.
But there's another problem with Clappin's argument: It's not just about being thinner and cheaper. Willow Glass can still be broken much more easily than a comparable plastic display. Cost and environmental issues definitely need to be considered, but is the trade-off worth losing one of the most compelling reasons manufacturers are developing P-OLEDs in the first place?
If one thing is clear in the end, it's that Corning needs to remain aware of this risk. Plastic OLED displays could easily change the face of the electronics industry as we know it, and not everybody will benefit.
I plan on holding onto my shares of Universal Display for years to come, but that doesn't mean it's the only stock out there with huge potential.
|RecommendKeepReplyMark as Last ReadRead Replies (1)
|To: Asymmetric who wrote (2237)
|3/30/2014 6:18:05 PM
|Corning exec slams sapphire -- rumored for Apple device
by Brooke Crothers / CNET March 4, 2014
A Corning Glass executive does not think very highly of sapphire crystal as a protective material for displays. That was made crystal clear at a Morgan Stanley conference.
Sapphire crystal is used to protect the iPhone 5S camera lens and in the 5S' home button.
A Corning executive launched a blistering critique of sapphire crystal, used as a protective material for displays, on Tuesday. The subtext was obviously aimed at Apple.
In defense of its Gorilla Glass, Tony Tripeny, a senior vice president at Corning Glass, was asked the following question at the Morgan Stanley Technology, Media & Telecom Conference, via Seeking Alpha, on Tuesday. The question came from analyst James Fawcett of Morgan Stanley.
Note that the "one large handset and device maker" is unmistakably Apple. Apple is expected to use sapphire crystal in some way for future devices, possibly including a future iPhone and iWatch.
"So we mentioned Sapphire and obviously there is one large handset and device maker that people suspect maybe looking at Sapphire. And at least from a Corning perspective, [what are] the puts and takes of Sapphire versus glass?"
When we look at it, we see a lot of disadvantages of Sapphire versus Gorilla Glass. It's about 10 times more expensive. It's about 1.6 times heavier. It's environmentally unfriendly. It takes about 100 times more energy to generate a Sapphire crystal than it does glass. It transmits less light which...means either dimmer devices or shorter battery life. It continues to break. I think while it's a scratch resistant product it still breaks and our testing says that Gorilla Glass [can take] about 2.5 times more pressure that it can take...Sapphire on. So when we look at it, we think from an overall industry and trend that is not attractive in consumer electronics. “
And Morgan Stanley's Fawcett continued to ask more questions. Such as: "Sapphire...What's inherently more expensive about Sapphire? Is there something [about] the material or is this just a volume game? If you could bring up Sapphire production that...would drop the price significantly and be more competitive with Gorilla Glass?"
So from the last question, I will probably answer that first. Clearly, Corning has been in the crystal manufacturing business for a very long time, both directly and also through our joint venture, Dow Corning. So our knowledge of this has a lot to do with our knowledge about round crystal manufacturing. If it was a business that was attractive to enter into, we certainly would be able to do that.
On the first question, I think it's really a combination of three things. The formation takes about 4,000 times longer than Gorilla Glass at a significantly higher melting temperature. Its hardness makes machining more difficult and costly. Then the cost per unit increases exponentially because when you have defects in boundaries in the crystal growth process, you essentially cut them out. And so unlike glass, where we have developed technologies so that we can have [a] very large pristine pieces of glass, when you have that on crystals, what you end up doing is always having a yield issue. So it is really those items that make things more expensive. “
[ Also machining the material is difficult and costly due to its innate hardness]
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|3/30/2014 6:32:33 PM
|Apple Inc.’s (AAPL) sapphire site the scene of frenzied construction, production, and expansion
by Rhian Hunt / Pfhub 03/28/2014
The huge sapphire production facility that Apple is currently building in Mesa, Arizona, known by the name of “Project Cascade,” is already producing sapphire crystal as quickly as possible despite being only partly constructed. What is more, construction at the site is ongoing, and reports indicated today that the Cupertino firm is arranging contracts with construction firms to expand the facility before it is even completed, indicating that sapphire displays are likely to be used in large numbers, possibly for multiple products.
Intriguingly, the expansion is said to be related to a secret project, according to TechnoBuffalo, which would seem to indicate that another major product launch besides that of the iPhone 6 is planned for the near future. This project is clearly not small-scale, since the number of furnaces for creating sapphire boules to be sliced into displays jumped from a previous estimate of 950 to the current planned total of 1,700.
Apple screenThis represents a near-doubling of capacity, and though some of these furnaces are likely earmarked to make material that will be used for iPhone 6 displays, there is clearly a plenitude of manufacturing capacity on the docket. The partly completed and newly started facilities should all be fully constructed and operational by June. Bids are being requested from local construction firms, and Rosendin Electric and Graybar Electric will apparently be among those companies involved in powering the facility.
Tim Cook clearly mentioned the existence of a secret project at the annual shareholders’ meeting last month, but his words were vague enough to leave nothing but a cloud of speculation in their wake. A new size of iPhone (now confirmed as a reality) and the much rumored iWatch are two favorites as the item referred to in Mr. Cook’s statements. Nevertheless, there is a possibility that the “secret” is a true dark horse, something that nobody outside the secretive Apple (AAPL) offices even suspects. Suppressing rumors and leaks about such a project would be a monumental undertaking. Such exotic outliers as a full screen Apple television (iTV?) with a sapphire display or a radical new tablet or notebook design are not wholly out of the question, however.
Some clues about the possible uses of all this new sapphire capacity come from the material itself. Its chief advantage is that it cannot be scratched by steel, making a display fashioned from manufactured sapphire practically scratch-proof. Since the material is expensive to make – even with the money saving economies of scale expected from the Mesa plant – it makes sense to only put it where scratching is likely. This limits use to mobile devices, which may end up in a pocket, purse, or attache case along with other objects that could score their surfaces. A sapphire TV screen seems superfluous, since televisions seldom come in contact with loose change, keyrings, or pocket knives.
Regardless of the exact project planned, Apple (AAPL) clearly needs a lot of sapphire in a hurry. The partly constructed facilities in Mesa are already running at maximum possible capacity using a huge array of portable generators for temporary power. Steve Jobs’ brainchild does not take half measures, and investors will continue to watch developments as a sign of possible opportunities offered in the near future by product releases from the world-famous electronics giant.
- See more at: pfhub.com
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|8/2/2014 9:48:35 PM
|Corning Watch: Is Corning ripe for takeover?
By Larry Wilson, Correspondent - StarGazette July 30, 2014
Forbes writer speculates that Corning Inc. may be a takeover target.
- Corning's high, free cash flow as well as proprietary products and low stock price may be attracting attention.
- Some speculate Apple Inc. could be among the suitors.
- Corning's institutional owners and its board would make the ultimate decision.
If you haven't had your nose buried in Forbes magazine this summer (and who has?), you might not know that one contributor to that publication has branded Corning Inc. as ripe for a takeover.
Author Gene Marcial says the Twin Tiers' largest employer is attracting attention for its high free cash flow, its proprietary products and its low stock price.
Marcial quotes Stephen Leeb, editor-in-chief of The Complete Investor:
"The right leadership could turn Corning into a dynamo, especially if it's broken up into parts. Although its business fundamentals aren't in their best position right now, the company has good turnaround potential ... So the odds of a takeover are clearly very high."
Leeb, also president of Leeb Investment Management in New York, thinks a buyer might sell or spin off the Fortune 500 company's liquid crystal display glass business — a big producer of free cash flow. That would produce a big windfall for investors and make the remainder of the company more attractive.
Some of this chatter is reminiscent of the Wall Street pressure placed on Corning in the late 1990s and early 2000s to become a "pure" fiber optics play. Then the collapse of the optical communications market proved how disastrous that strategy would have been.
Two of the potential suitors for a takeover of Corning whose names are being whispered in the market include Apple and Korea industrial giant. Private equity funds may also be interested.
Samsung, a former partner in Samsung-Corning Precision Glass, got a 7 percent stake in Corning Inc. when Corning bought out the partnership last fall.
Corning claims independence as one of its major values and would be hostile to any takeover attempt. The ultimate decision in any such situation would be made by the company's board of directors and its shareholders.
The shareholders with the clout to decide the issue are the institutional owners, not the individual investors with emotional ties to the company.
Such a decision would then be made on the basis of its economic value rather than its impact on the Corning community.
Some of the big investors who would play a major role in determining the outcome of a takeover bid include Vanguard, which owns 5.3 percent of Corning Inc., Dodge & Cox with 4.4 percent, State Street with 4.1 percent, Loomis Sayles with 4 percent and Black Rock with 3.2 percent.
Whether such a bid surfaces, in the long term or the short term, remains to be seen.
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|8/2/2014 9:55:06 PM
|Corning Feels Pain of Weak Tablet Sales
Glass Screen Maker Cuts Its Tablet Outlook After Overestimating Market
By Anna Prior / WSJ July 29, 2014 3:25 p.m. ET
Corning maker of glass screens, became the latest company to feel the pain of slowing tablet sales, saying it had overestimated the market.
Shares fell 9.6% to $19.93 in midday trading as Corning's earnings were hurt in part by weaker-than-expected sales of its mobile-device display covers, called Gorilla Glass.
Known for making display glass used in high-definition televisions and fiber-optic gear, Corning also picked up on the smartphone boom with Gorilla Glass, a specially-treated display cover for touch-screen devices that resists scratching and breakage. However, Gorilla Glass has faced headwinds, with sales falling 17% last year as Corning worked through an inventory overhang after a bad bet on touch-screen laptops.
Corning on Tuesday made some significant reductions to its cover glass forecast for the year, specifically regarding the media tablet market, which it expects to only grow 8% to 10% this year.
"We just got that really wrong about what was happening in the tablet market, and we have adjusted down our forecast," Chief Financial officer James Flaws said on the company's quarterly conference call. He noted that lower-than-expected tablet sales was the reason for the reduced expectations for Gorilla Glass growth this year.
Enthusiasm for tablets has waned as smartphone screens grow larger and laptop computers grow thinner and lighter. Tablets aren't as essential to many users as smartphones, nor are they as portable. They don't handle many work chores as well as laptop or desktop PCs. And while many people watch videos or read articles on a tablet, it isn't quite a must-have device for many consumers.
As such, Apple last week said that unit sales of the iPad—the best-selling tablet on the market—fell for a second straight quarter, while recent evidence points to slowing sales for imitators that rushed their own tablets to market.
On Tuesday, Corning said sales for its specialty materials, which includes Gorilla Glass, rose 14% sequentially in the second quarter but still fell short of the company's expectations.
"We believe our Gorilla Glass sales reflect what happened in the smartphone and tablet markets in the first half of the year," said Mr. Flaws, adding that in the second-quarter, the company saw "evidence of disappointing sale through, which we believe contributed to our weaker sales into the supply chain."
Corning, which relies on sales of LCD-TV glass for the bulk of its profit, confirmed Tuesday that liquid-crystal display glass price declines in the quarter were more moderate than those in the first quarter.
The company's LCD glass volume, meanwhile, grew more than expected in part because of stronger-than-expected retail TV sales in Europe and South America, likely because of the FIFA World Cup, the company said. Corning said LCD glass volume rose in the low-teens percentage sequentially, compared with expectations of a high-single-digit percentage increase.
For the third quarter, Corning said it expects its LCD glass volume will be up by a mid-single-digit percentage sequentially, while price declines are expected to moderate further, returning to the rates experienced through most of 2013.
Overall, Corning reported a profit of $169 million, or 11 cents a share, down from $638 million, or 43 cents a share, a year earlier. Excluding acquisition-related costs and other items, core earnings per share rose to 37 cents from 32 cents.
Sales jumped 25% to $2.48 billion, while core sales rose 28% to $2.58 billion.
Analysts polled by Thomson Reuters predicted earnings of 38 cents a share on revenue of $2.53 billion.
Product costs rose 32%, and selling, general and administrative costs climbed 20%.
Cheap Tablets Crack Corning's Stock
By Dan Gallagher / WSJ July 29, 2014
Corning's high-profile Gorilla Glass business has slipped on a banana peel.
Corning shares slumped sharply Tuesday after the company reported quarterly earnings per share that missed Wall Street's consensus forecast by all of a penny. The selloff reflects in part a high valuation heading into the announcement: 13.7 times forward earnings, or 36% above the stock's five-year average, according to FactSet.
The main culprit for the miss was lower-than-expected sales in Corning's specialty-materials segment, which includes the Gorilla Glass cover material used in smartphones and tablets. On its conference call, the company singled out weakness in tablet demand, noting that the fastest-growing segment of this market is for lower-end devices less likely to use Gorilla Glass. Specialty-materials revenue increased 14% from the first quarter, well below the company's prior forecast of 20% to 25%.
The specialty-materials business accounts for only 11% of Corning's revenue, so some may deem the selloff an overreaction. The company's largest segment remains LCD glass used in large-screen TV sets and other products, and revenue from that business jumped 62% year over year while revenue from specialty materials was merely flat on that basis.
But perceptions of Corning's value have become closely identified with the popular Gorilla Glass brand, such that the business has an outsize effect on the company's stock.
Given the weakness in tablets, Corning will need successful launches of new smartphones—particularly the larger-screen iPhone 6 from Apple —to make its numbers for the third quarter. The company predicted a 10% sequential gain in specialty-materials revenue for the third quarter, which is a bit higher than the 8% gain it delivered in the same period last year that included the launch of the iPhone 5s.
But phones come with a catch: They use less display materials than tablets. So Corning must keep Gorilla Glass—and its stock valuation—balanced on a smaller footprint.
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|11/7/2014 1:48:44 PM
|Scientist who developed CorningWare dies in NY
Scientist who developed CorningWare, used in popular white casserole dishes, dies at 99
By David Pitt, Associated Press Nov 7, 2014
In this 1950 photo provided by Corning Inc., Dr. Don Stookey prepares to expose an image to ultraviolet light. Stookey, who forever changed cooking with the invention of CorningWare, died Tuesday, Nov. 4, 2014, at an assisted living center in Rochester, New York. He was 99.(AP Photo/Corning, Inc.)
DES MOINES, Iowa (AP) -- S. Donald Stookey was a young scientist researching the properties of glass in 1952 when he put a glass plate into an oven to heat it. But the oven malfunctioned.
Instead of heating to about 1,100 degrees Fahrenheit, the oven shot up to more than 1,600 degrees. Stookey expected to find a molten mess. Instead, he found an opaque, milky-white plate.
As he was removing it from the oven, his tongs slipped, and the plate fell to the floor. But instead of shattering, it bounced.
Stookey, who died Tuesday at 99, had just discovered glass ceramics — a breakthrough that soon led to the development of CorningWare, the durable, heat-resistant ceramic glass used to make millions upon millions of baked lasagnas, tuna casseroles and other potluck-dinner dishes.
Although he was never a household name, Stookey's best-known invention found a home in most American kitchens in the form of white dishes decorated with small blue cornflowers.
The space-age material was so strong that the military used it in guided missile nose cones.
Stookey died at an assisted-living center in Rochester, New York, said his son Donald Stookey. He said his father broke a hip in a fall a few months ago and underwent surgery, but his health deteriorated.
"He was one of the great glass scientists in the history of the world," said Steve Feller, a physics professor at Coe College in Cedar Rapids, Iowa, where Stookey earned an undergraduate degree in chemistry and mathematics and remained active in alumni activities. "Virtually everyone has had CorningWare at some point in time, and there were all sorts of spinoff applications from his fantastic work."
CorningWare was celebrated for its versatility. It was strong enough to withstand minor kitchen mishaps, and it gave home cooks the ability to bake and serve food in the same dish. The dishes could go straight from the oven to the dinner table and then into the refrigerator or freezer.
You could also put them in a microwave, and some types could be heated atop a stove. For decades, they were a common sight at family gatherings, church dinners and holiday feasts.
FILE- In this undated photo provided by Corning Inc., shown are pieces of CorningWare dishes. Dr. Do …
Stookey joined Corning Glass Works in New York in 1940, the same year he graduated with a doctorate in physical chemistry from the Massachusetts Institute of Technology. He immersed himself in research, studying the complex chemistry of oxidation and its effects on glass, according to a company biography.
Corning patented its glass ceramics as Pyroceram. By the end of the 1950s, CorningWare had become one of the company's most successful product lines.
"He was fearless — the unknown never daunted him," said David Morse, Corning's chief technology officer. "He was an unassuming and quiet but tough person," whose numerous inventions generated big businesses for the company. "Don was recognized throughout the glass technology community as a world-class scientist."
In a 2011 interview, Stookey said he initially viewed glass research as a way to make money, but he became intrigued by glass' special characteristics.
"I thought this might be a field where I could find something new, invent things not seen before, and I was lucky to have that be the case," he said in a video project funded by the History Channel for the Corning Museum of Glass.
Stookey held the patent on CorningWare, according to his son, who believes his father made money on a percentage of the sales but did not get rich.
In the late 1960s, the elder Stookey felt burned-out and out of ideas, the son said. He offered to leave the company. The family that started Corning told him to take a year off with pay. He traveled the world and returned to spend another 20 years with the company.
CorningWare is still sold today, although it is now marketed by World Kitchen LLC, a Rosemont, Illinois-based company formed after Corning Inc. spun off its consumer-products division in 1998.
Stookey earned 60 U.S. patents. His other innovations included developing photosensitive glass that helped lead to color television picture tubes.
He received the National Medal of Technology from President Ronald Reagan in 1987. In 2010, at age 94, he was inducted into the National Inventors Hall of Fame.
"Half of his life was being a professional, well-known scientist, and the other half was fully being a father to three of us kids, a family man and a good husband," Stookey's son said. "He took us hunting and fishing and on vacations around the country and around the world."
Stookey was born in Hay Springs, Nebraska, on May 23, 1915. His family moved from Nebraska to Cedar Rapids when he was 6. He graduated from Coe College in 1936 before earning a master's degree in chemistry from Lafayette College in Easton, Pennsylvania, followed by the MIT doctorate.
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|11/19/2014 7:46:02 PM
|Inside Apple’s Broken Sapphire Factory
How $1 Billion Bet on iPhone Screens Failed; The ‘Boule Graveyard’
By Daisuke Wakabayashi / WSJ Nov. 19, 2014
(background story on a Corning competitor)
Shortly before 7 a.m. Pacific time on Oct. 6, the chief executive of GT Advanced Technologies Inc. called an Apple Inc. vice president with bad news: GT, which was to supply Apple with superhard sapphire screens for its new iPhones, had filed for bankruptcy 20 minutes earlier.
The filing surprised Apple, because the companies had been negotiating changes in their contract to ease GT’s financial strain, according to a letter Apple later sent to GT’s creditors. Executives of the companies had planned to meet the next day at Apple’s headquarters.
A year earlier, Apple and GT had hailed a $1 billion plan to build an Arizona factory that would produce 30 times as much sapphire as any other plant in the world.
Instead, the alliance turned into a rare—and public—misstep for Apple, whose strict management of its global supply chain has helped it become the world’s biggest company by market value. From the making of the first iPhone in 2007, Apple repeatedly has pushed its suppliers to achieve the improbable, while driving hard bargains on price and time to market.
The Apple-GT marriage was troubled from the start. GT hadn’t mass-produced sapphire before the Apple deal. The New Hampshire company’s first 578-pound cylinder of sapphire, made just days before the companies signed their contract, was flawed and unusable. GT hired hundreds of workers with little oversight; some bored employees were paid overtime to sweep floors repeatedly, while others played hooky.
GT’s meltdown underscores the promise and peril for Apple suppliers. An Apple deal can generate billions in revenue. But it also means adapting to huge fluctuations in demand, at razor-thin profit margins and little room for error. “This is not easy money,” said an executive of a longtime Apple supplier in Asia.
GT Chief Operating Officer Daniel Squiller told the bankruptcy court that Apple had turned his company into a captive supplier, “bearing all of the risk and all of the cost.” GT couldn’t make a profit at Apple’s “dictated pricing,” he said.
Apple put blame for the deal’s failure “squarely at the feet of GTAT’s own management,” according to the letter to GT’s creditors, which Apple allowed The Wall Street Journal to review. “We never wavered from our commitment to make the project successful.”
The Cupertino, Calif., company turned to GT while seeking to solve a big problem with iPhones: scratched or broken screens. Sapphire is one of the hardest materials on earth, now typically produced synthetically, in furnaces that reach more than 3,600 degrees Fahrenheit. It also is expensive—more than five times the cost of glass.
Apple consumes one-fourth of the world’s supply of sapphire to cover the iPhone’s camera lens and fingerprint reader. Early last year, the company began looking for a much larger supply, to cover the iPhone’s screen.
GT made furnaces for producing sapphire. According to Apple’s letter to the creditors, GT told Apple in March of last year that it was developing a furnace that could produce a sapphire cylinder, known as a boule, weighing 578 pounds, more than twice as large as what were then the biggest boules. The larger boule would yield more screens, reducing costs.
GT said in its bankruptcy filings that Apple expressed interest in buying 2,600 of the new furnaces.
Around early summer, Apple switched gears and asked GT to make the sapphire. Apple didn’t want to pay GT’s typical 40% margin for the furnaces, a person close to GT’s operations said.
Apple also was having trouble finding a sapphire manufacturer. An executive at another company Apple approached last year said it couldn’t make a profit producing sapphire at the price Apple wanted.
Apple offered to lend GT $578 million toward building 2,036 furnaces and operating a factory in Mesa, Ariz. Apple would buy and retrofit the factory for an additional $500 million and lease it to GT for $100 a year.
GT was intrigued, because the agreement would provide more consistent revenue than equipment orders. Moreover, GT’s business making equipment for solar cells had fallen on hard times. GT’s 2013 revenue was down 66% from two years earlier.
On Oct. 31 of last year, GT and Apple signed an agreement, a few days after the first 578-pound boule emerged from a GT furnace. The cylinder was cracked so badly that none of the sapphire was usable, people familiar with Apple’s operations said.
GT said the quality would improve, and Apple was encouraged by GT’s track record of making successively bigger furnaces, the people said.
GT quickly set out to hire 700 staffers. Hiring moved so quickly that at one point in late spring, more than 100 recent hires didn’t know who they reported to, a former manager said. Two other former workers said there was no attendance policy, which led to an unusual number of sick days.
GT managers in the spring authorized unlimited overtime to fill furnaces with materials to grow sapphire. But GT hadn’t built enough furnaces yet, so many workers had nothing to do, two former employees said.
“We just kept sweeping the floors over and over,” one of the former employees said. “I just saw money flying out the door.”
Producing sapphire proved to be the biggest problem. It took roughly 30 days and cost about $20,000 to make a single boule. The people familiar with Apple’s operations said more than half the boules were unusable.
GT stored unusable cylinders in rows in an area of the Mesa factory that employees labeled the “boule graveyard,” people close to GT’s operations said.
Mr. Squiller, the GT operations chief, told the bankruptcy court that GT lost three months of production to power outages and delays building the facility.
Apple was responsible for building the facility to GT’s specifications and providing power. Apple told the creditors that GT failed because of “mismanagement,” not power interruptions.
Apple’s comments were “purposely misleading, out of context or inaccurate,” GT said in a brief statement for this article. “There is no point in engaging in a point-by-point debate on each issue.”
Late this April, Apple withheld the final $139 million it was supposed to advance GT, saying it hadn’t met the contract’s output or quality requirements.
GT said in its bankruptcy filing that Apple repeatedly changed specifications for the sapphire. The filing said GT spent $900 million—more than twice the $439 million Apple provided—to get the factory up and running.
On June 6, GT Chief Executive Thomas Gutierrez met with two Apple vice presidents in Cupertino to explain the production problems, according to Apple’s letter to the creditors. He presented a document titled “What Happened,” listing 17 problems, including improperly stocking the furnaces and creating problems by inadvertently changing a furnace design.
Mr. Gutierrez said he was there to “fall on his sword,” the Apple letter said. After the meeting, GT decided to stop producing 578-pound boules and make 363-pound cylinders to get the formula right.
GT spent $900 million—more than twice the $439 million Apple provided—to get the sapphire factory up and running. GT Advanced Technologies
When a boule was suitable, GT used a diamond saw to carve 14-inch thick bricks in the shape of Apple’s two new phones: the iPhone 6 and iPhone 6 Plus. Those bricks would be sliced lengthwise to make screens.
Manufacturing wasn’t the only problem. In August, one of the former workers said, GT discovered that 500 sapphire bricks were missing. A few hours later, workers learned that a manager had sent the bricks to recycling instead of shipping. Had they not been retrieved, the misfire would have cost GT hundreds of thousands of dollars.
By that point, it was apparent that sapphire wouldn’t be used for the screens on the new iPhones, which went on sale Sept. 19. Yet Apple still was eager to get as much sapphire as possible, the people familiar with its operations said. Apple’s letter said it only received 10% of the sapphire that GT originally promised.
The people close to GT’s operations said contractors for Apple applied quality standards inconsistently, sometimes accepting bricks that had been rejected a few days earlier.
In the first week of September, GT told Apple that it was having significant cash-flow problems. It asked Apple to pay the final $139 million loan installment and asked Apple to pay more for sapphire deliveries starting in 2015, one of the people familiar with GT’s operations said.
On Oct. 1, Apple offered to give GT $100 million of the $139 million loan installment and delay the repayment schedule, the people familiar with Apple’s operations said. Apple also offered to raise the price it paid for sapphire this year, to discuss raising it for 2015 and to relax exclusivity agreements so GT could sell furnaces to other customers, they said. The companies agreed to discuss the offer in person Oct. 7 in Cupertino.
Then came the early-morning Oct. 6 call, when GT chief Mr. Gutierrez told Apple that his company had sought bankruptcy protection. The people close to GT’s operations said executives hadn’t told Apple about the bankruptcy plan because they feared Apple would try to thwart them.
GT shares collapsed 93% on the news, wiping out roughly $1.4 billion in market value.
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|11/20/2014 9:13:24 PM
|As Apple Pursues Sapphire, Corning Says It Made Even Tougher Gorilla Glass
By Daisuke Wakabayashi / WSJ Nov 20, 2014
Corning whose Gorilla Glass is used iPhone displays, said it has developed a new version of the super-hard glass that aims to address broken or shattered screens from everyday drops.
The new version of Gorilla Glass comes as Apple’s attempts to use sapphire in its iPhone screens have hit an impasse with the bankruptcy of its one-time sapphire partner GT Advanced Technologies. Apple’s desire to prevent broken screens in its phones was the impetus behind a failed $1 billion investment in a mega-factory to produce massive amounts of the super-hard material.
In a press release, Corning said it dropped devices face down from one meter, or 39 inches, high onto a rough surface. It found that the new Gorilla Glass was up to two times tougher than competitive glasses. Corning said the new glass survived up to 80% of the time.
Gorilla Glass was instrumental in the development of the original iPhone. In the months leading up to the launch of the original iPhone, Steve Jobs reached out to Corning and asked it to start producing a super-hard glass for the device.
Originally developed in the 1960s for fighter-jet cockpits, Gorilla Glass allowed Apple to ditch its original plan to cover the iPhone in plastic.
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