|From: Asymmetric||10/10/2012 1:22:21 AM|
|Glass Works: How Corning Created the Ultrathin, Ultrastrong Material of the Future|
By Bryan Gardiner / Wired Magazine September 24, 2012
Molten glass cools to become so gummy it can be cut with scissors.
Don Stookey knew he had botched the experiment. One day in 1952, the Corning Glass Works chemist placed a sample of photosensitive glass inside a furnace and set the temperature to 600 degrees Celsius. At some point during the run, a faulty controller let the temperature climb to 900 degrees C. Expecting a melted blob of glass and a ruined furnace, Stookey opened the door to discover that, weirdly, his lithium silicate had transformed into a milky white plate. When he tried to remove it, the sample slipped from the tongs and crashed to the floor. Instead of shattering, it bounced.
The future National Inventors Hall of Fame inductee didn’t know it, but he had just invented the first synthetic glass-ceramic, a material Corning would later dub Pyroceram. Lighter than aluminum, harder than high-carbon steel, and many times stronger than regular soda-lime glass, Pyroceram eventually found its way into everything from missile nose cones to chemistry labs. It could also be used in microwave ovens, and in 1959 Pyroceram debuted as a line of space-age serving dishes: Corningware.
The material was a boon to Corning’s fortunes, and soon the company launched Project Muscle, a massive R&D effort to explore other ways of strengthening glass. A breakthrough came when company scientists tweaked a recently developed method of reinforcing glass that involved dousing it in a bath of hot potassium salt. They discovered that adding aluminum oxide to a given glass composition before the dip would result in remarkable strength and durability. Scientists were soon hurling fortified tumblers off their nine-story facility and bombarding the glass, known internally as 0317, with frozen chickens. It could be bent and twisted to an extraordinary degree before fracturing, and it could withstand 100,000 pounds of pressure per square inch. (Normal glass can weather about 7,000.) In 1962 Corning began marketing the glass as Chemcor and thought it could work for products like phone booths, prison windows, and eyeglasses.
Yet while there was plenty of initial interest, sales were slow. Some companies did place small orders for products like safety eyeglasses. But these were recalled for fear of the potentially explosive way the glass could break. Chemcor seemed like it would make a good car windshield too, and while it did show up in a handful of Javelins, made by American Motors, most manufacturers weren’t convinced that paying more for the new muscle glass was worth it—especially when the laminated stuff they’d been using since the ’30s seemed to work fine.
Corning had invented an expensive upgrade nobody wanted. It didn’t help that crash tests found that “head deceleration was significantly higher” on the windshields—the Chemcor might remain intact, but human skulls would not.
After pitches to Ford Motors and other automakers failed, Project Muscle was shut down and Chemcor was shelved in 1971. It was a solution that would have to wait for the right problem to arise.
When glass is hardened and strengthened it can withstand huge amounts of force from a lever press.
From above, Corning’s headquarters in upstate New York looks like a Space Invaders alien: Designed by architect Kevin Roche in the early ’90s, the structure fans out in staggered blocks. From the ground, though, the tinted windows and extended eaves make the building look more like a glossy, futuristic Japanese palace.
The office of Wendell Weeks, Corning’s CEO, is on the second floor, looking out onto the Chemung River. It was here that Steve Jobs gave the 53-year-old Weeks a seemingly impossible task: Make millions of square feet of ultrathin, ultrastrong glass that didn’t yet exist. Oh, and do it in six months. The story of their collaboration—including Jobs’ attempt to lecture Weeks on the principles of glass and his insistence that such a feat could be accomplished—is well known.
How Corning actually pulled it off is not.
Weeks joined Corning in 1983; before assuming the top post in 2005, he oversaw both the company’s television and specialty glass businesses. Talk to him about glass and he describes it as something exotic and beautiful—a material whose potential is just starting to be unlocked by scientists. He’ll gush about its inherent touchability and authenticity, only to segue into a lecture about radio-frequency transparency. “There’s a sort of fundamental truth in the design value of glass,” Weeks says, holding up a clear pebble of the stuff. “It’s like a found object; it’s cool to the touch; it’s smooth but has surface to it. What you’d really want is for this to come alive. That’d be a perfect product.”
Weeks and Jobs shared an appreciation for design. Both men obsessed over details. And both gravitated toward big challenges and ideas. But while Jobs was dictatorial in his management style, Weeks (like many of his predecessors at Corning) tends to encourage a degree of insubordination. “The separation between myself and any of the bench scientists is nonexistent,” he says. “We can work in these small teams in a very relaxed way that’s still hyperintense.”
Indeed, even though it’s a big company—29,000 employees and revenue of $7.9 billion in 2011—Corning still thinks and acts like a small one, something made easier by its relatively remote location, an annual attrition rate that hovers around 1 percent, and a vast institutional memory. (Stookey, now 97, and other legends still roam the halls and labs of Sullivan Park, Corning’s R&D facility.) “We’re all lifers here,” Weeks says, smiling. “We’ve known each other for a long time and succeeded and failed together a number of times.”
One of the first conversations between Weeks and Jobs actually had nothing to do with glass. Corning scientists were toying around with microprojection technologies—specifically, better ways of using synthetic green lasers. The thought was that people wouldn’t want to stare at tiny cell phone screens to watch movies and TV shows, and projection seemed like a natural solution. But when Weeks spoke to Jobs about it, Apple’s chief called the idea dumb. He did mention he was working on something better, though—a device whose entire surface was a display. It was called the iPhone.
Jobs may have dismissed green lasers, but they represented the kind of innovation for innovation’s sake that defines Corning. So strong is this reverence for experimentation that the company regularly invests a healthy 10 percent of its revenue in R&D. And that’s in good times and in bad. When the telecom bubble burst in 2000 and cratering fiber-optic prices sent Corning’s stock from $100 to $1.50 per share by 2002, its CEO at the time reassured scientists that not only was Corning still about research but that R&D would be the path back to prosperity.
“They’re one of the very few technology-based firms that have been able to reinvent themselves on a regular basis,” says Rebecca Henderson, a professor at Harvard Business School who has studied Corning’s history of innovation. “That’s so easy to say, and it is so hard to do.” Part of that success lies in the company’s ability not only to develop new technologies but to figure out how to make them on a massive scale. Still, even when Corning succeeds at both, it can often take the manufacturer decades to find a suitable—and profitable enough—market for its innovations. As Henderson notes, innovation at Corning is largely about being willing and able to take failed ideas and apply them elsewhere.
Glass starts out as a mixture of very fine powders like limestone, sand, and sodium borate.
Photo: Max Aguilera-Hellweg
The idea to dust off the Chemcor samples actually cropped up in 2005, before Apple had even entered the picture. Motorola had recently released the Razr V3, a flip phone that featured a glass screen in lieu of the typical high-impact plastic. Corning formed a small group to examine whether an 0317-like glass could be revived and applied to devices like cell phones and watches. The old Chemcor samples were as thick as 4 millimeters. But maybe they could be made thinner. After some market research, executives believed the company could even earn a little money off this specialty product. The project was codenamed Gorilla Glass.
By the time the call from Jobs came in February 2007, these initial forays hadn’t gotten very far. Apple was suddenly demanding massive amounts of a 1.3-mm, chemically strengthened glass—something that had never been created, much less manufactured, before. Could Chemcor, which had never been mass-produced, be married to a process that would yield such scale? Could a glass tailored for applications like car windshields be made ultrathin and still retain its strength? Would the chemical strengthening process even work effectively on such a glass? No one knew. So Weeks did what any CEO with a penchant for risk-taking would do. He said yes.
For a material that’s so familiar as to be practically invisible, modern industrial glass is formidably complex. Standard soda-lime glass works fine for bottles and lightbulbs but is terrible for other applications, because it can shatter into sharp pieces. Borosilicate glass like Pyrex may be great at resisting thermal shock, but it takes a lot of energy to melt it.
At the same time, there are really only two ways to produce flat glass on a large scale, something called fusion draw and the float glass process, in which molten glass is poured onto a bed of molten tin. One challenge a glass company faces is matching a composition, with all its desired traits, to the manufacturing process. It’s one thing to devise a formula. It’s another to manufacture a product out of it.
Corning is working on new flexible glass formulations that will ship on spools.
Photo: Max Aguilera-Hellweg
Regardless of composition, the main ingredient in almost all glass is silicon dioxide (aka sand). Because it has such a high melting point (1,720 degrees C), other chemicals, like sodium oxide, are used to lower the melting temperature of the mixture, making it easier to work with and cheaper to produce. Many of these chemicals also happen to imbue glass with specific properties, such as resistance to x-rays, tolerance for high temperatures, or the ability to refract light and disperse colors. Problems arise, though, when the composition is changed; the slightest tweak can result in a drastically different material. Throwing in a dense element like barium or lanthanum, for example, will decrease the melting temperature, but you risk not getting a homogeneous mixture. And maxing out the overall strength of a glass means you’re also making that glass more likely to fracture violently when it does fail. Glass is a material ruled by trade-offs. This is why compositions, particularly those that are fine-tuned for a specific manufacturing process, are fiercely guarded secrets.
One of the pivotal steps in glassmaking is the cooling. In large-scale manufacturing of standard glass, it’s essential for the material to cool gradually and uniformly in order to minimize the internal stresses that would otherwise make it easier to break. This is called annealing.
The goal with tempered glass, however, is to add stress between the inner and outer layer of the material. This, paradoxically, can make the glass stronger: Heat a sheet of glass until it softens, then rapidly cool, or quench, its outer surfaces. This outside shell quickly contracts while the inside remains molten. As the center of the glass cools, it tries to contract, pulling on the outer shell. A zone of tension forms in the center, while the outer surfaces are even more tightly compressed. Tempered glass will eventually break if you chip through this toughened outer compressive layer into the zone of tension. But even thermal tempering has its limits. The amount of strengthening you can achieve is dependent on how much the glass contracts upon cooling, and most compositions will shrink only modestly.
The interplay between compression and tension is best demonstrated by something called a Prince Rupert’s drop. Formed by dripping globs of molten glass into ice water, the quickly cooled and compressed heads of these tadpole-shaped droplets can withstand massive amounts of punishment, including repeated hammer blows. The thin glass at the end of the tail is more vulnerable, however, and if you break it the fracture will propagate through the drop at 2,000 miles per hour, releasing the inner tension. Violently. In some cases, a Prince Rupert’s drop can explode with such force that it will actually emit a flash of light.
Chemical strengthening, the method of fortifying glass developed in the ’60s, creates a compressive layer too, through something called ion exchange. Aluminosilicate compositions like Gorilla Glass contain silicon dioxide, aluminum, magnesium, and sodium. When the glass is dipped in a hot bath of molten potassium salt, it heats up and expands. Both sodium and potassium are in the same column on the periodic table of elements, which means they behave similarly. The heat from the bath increases the migration of the sodium ions out of the glass, and the similar potassium ions easily float in and take their place. But because potassium ions are larger than sodium, they get packed into the space more tightly. (Imagine taking a garage full of Fiat 500s and replacing most of them with Chevy Suburbans.) As the glass cools, they get squeezed together in this now-cramped space, and a layer of compressive stress on the surface of the glass is formed. (Corning ensures an even ion exchange by regulating factors like heat and time.)Compared with thermally strengthened glass, the “stuffing” or “crowding” effect in chemically strengthened glass results in higher surface compression (making it up to four times as strong), and it can be done to glass of any thickness or shape.
Engineers at Corning use an array of torture devices to test the limits of its products.
Photo: Max Aguilera-Hellweg
By the end of March, Corning was closing in on its formula. But the company also needed to manufacture it. Inventing a new manufacturing process was out of the question, as that could take years. To meet Apple’s deadline, two of Corning’s compositional scientists, Adam Ellison and Matt Dejneka, were tasked with figuring out how to adapt and troubleshoot a process the company was already using. They needed something capable of spitting out massive quantities of thin, pristine glass in a matter of weeks.
There was really only one choice: fusion draw. In this technique, molten glass is poured from a tank into a trough called an isopipe. The glass overflows on each side, then the two streams rejoin under the isopipe. It’s drawn down at a prescribed rate by rollers to form a continuous sheet. The faster it’s drawn, the thinner the glass.
Corning’s one fusion-capable factory in the US is in Harrodsburg, Kentucky. In early 2007, that plant’s seven 15-foot-tall tanks were going full blast, each churning out more than 1,000 pounds per hour of sold-out LCD glass for TV panels. One tank could meet Apple’s initial request. But first the old Chemcor compositions had to be reformulated. The glass not only needed to be 1.3 mm now, it also had to have better visual characteristics than, say, a pane in a telephone booth.
Ellison and his team had six weeks to nail it. To be compatible with the fusion process, the glass also needed to be extra stretchy, like chewing gum, at a fairly low temperature. The problem was, anything you do to increase a glass’s gooeyness also tends to make it substantially more difficult to melt. By simultaneously altering seven individual parts of the composition—including changing the levels of several oxides and adding one new secret ingredient—the compositional scientists found they were able to ramp up the viscosity while also producing a finely tuned glass capable of higher compressive stress and faster ion exchange. The tank started in May 2007. By June, it had produced enough Gorilla Glass to cover seven football fields.
In just five years, Gorilla Glass has gone from a material to an aesthetic—a seamless partition that separates our physical selves from the digital incarnations we carry in our pockets. We touch the outer layer and our body closes the circuit between an electrode beneath the screen and its neighbor, transforming motion into data. It’s now featured on more than 750 products and 33 brands worldwide, including notebooks, tablets, smartphones, and TVs. If you regularly touch, swipe, or caress a gadget, chances are you’ve interacted with Gorilla.
Corning’s revenue from the glass has skyrocketed, from $20 million in 2007 to $700 million in 2011. And there are other uses beyond touchscreens. At this year’s London Design Festival, Eckersley O’Callaghan—the design firm responsible for some of Apple’s most iconic stores—unveiled a serpentine-like glass sculpture made entirely from Gorilla Glass. It may even end up on windshields again: The company is in talks to install it in future sports car models.
Today, two yellow robotic arms grab 5-foot-square panels of Gorilla Glass with special residue-limiting suction cups and place them in wooden crates. From Harrodsburg, these crates are trucked to Louisville and loaded on a westbound train. Once they hit the coast, the sheets get loaded onto freight ships for their eventual date at one of Corning’s “finisher” facilities in China, where they get their molten potassium baths and are cut into touchable rectangles.
Of course, for all its magical properties, a quick scan of the Internet will reveal that Gorilla Glass does fail, sometimes spectacularly so. It breaks when phones are dropped, it spiders if they bend, it cracks when they’re sat on. Gorilla Glass is, after all, glass. Which is why a small team at Corning spends a good portion of the day smashing the hell out of the stuff.
“We call this a Norwegian hammer,” says Jaymin Amin, pulling a metal cylinder out of a wooden box. The tool is usually wielded by aircraft engineers to test the sturdiness of a plane’s aluminum fuselage. But Amin, who oversees all new glass development in the Gorilla family, pulls back the spring-loaded impact hammer and releases 2 joules of impact energy onto a 1-mm-thick piece of glass, enough to put a big dent in a block of wood. Nothing happens.
The success of Gorilla Glass presents some unique challenges for Corning. This is the first time the company has faced the demands of such rapid iteration: Each time a new version of the glass is released, the way it performs in the field has to be monitored for reliability and robustness. To that end, Amin’s team collects hundreds of shattered Gorilla Glass phones. “Almost all breakage, whether it’s big or small, begins at one spot,” says senior research scientist Kevin Reiman, pointing to a nearly invisible chip on an HTC Wildfire, one of a handful of crunched phones on the table in front of him. Once you actually locate that spot, you can start to measure the crack to get an idea of how the tension was applied to the glass; if you can reproduce a break, you can study how it propagated and attempt to prevent it, either compositionally or through chemical strengthening.
Armed with this information, the rest of the group jumps in to re-create that precise kind of failure over and over. They use lever presses; drop testers with granite, concrete, and asphalt surfaces; free gravity ball drops; and various industrial-looking torture devices armed with an arsenal of diamond tips. There’s even a high-speed camera capable of filming at 1 million frames per second to study flexure and flaw propagation.
All this destruction and controlled mayhem has paid off. Compared with the first version of the glass, Gorilla Glass 2 is 20 percent stronger (a third version is due out early next year).
The Corning composition scientists have accomplished this by pushing the compressive stress to its limit—they were being conservative with the first version of Gorilla—while managing to avoid the explosive breakage that can come with that increase. Still, glass is a brittle material. And while brittle materials tend to be extremely strong under compression, they’re also extremely weak under tension: If you bend them, they can break.
The key to Gorilla Glass is that the compression layer keeps cracks from propagating through the material and catastrophically letting tension take over. Drop a phone once and the screen may not fracture, but you may cause enough damage (even a microscopic nick) to critically sap its subsequent strength. The next drop, even if it isn’t as severe, may be fatal. It’s one of the inevitable consequences of working with a material that is all about trade-offs, all about trying to create a perfectly imperceptible material.
Back at the Harrodsburg plant, a man wearing a black Gorilla Glass T-shirt is guiding a 100-micron-thick sheet of glass (about the thickness of aluminum foil) through a series of rollers. The machine looks like a printing press, and appropriately, the glass that comes off it bends and flexes like a giant glimmering sheet of transparent paper. This remarkably thin, rollable material is called Willow. Unlike Gorilla Glass, which is meant to be used as armor, Willow is more like a raincoat. It’s durable and light, and it has a lot of potential. Corning imagines it will facilitate flexible smartphone designs and uber-thin, roll-up OLED displays. An energy company could also use Willow for flexible solar cells. Corning even envisions ebooks with glass pages.
Eventually, Willow will ship out on huge spools, like movie reels, each holding up to 500 feet of glass. That is, once someone places an order. For now, rolls of glass sit on the Harrodsburg factory floor, a solution waiting for the right problem to arise.
Bryan Gardiner (firstname.lastname@example.org) also writes about anatomical models made of borosilicate in this issue.
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|From: John Hayman||10/24/2012 8:01:11 AM|
|NEW YORK (MarketWatch) -- Corning Inc. said on Wednesday that it earned $521 million, or 35 cents a share in the third quarter, compared to $462 million, or 30 cents a share a year ago. Sales in the quarter rose to $2.04 billion, from $1.91 billion a year ago. Analysts polled by FactSet Research had expected the glass company to earn 32 cents a share on revenue of $2.02 billion. |
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|From: Asymmetric||2/11/2014 10:10:49 AM|
|Corning Up Against a Glass Ceiling |
Susquehanna says the glass and ceramics giant is hampered by price trends.
Corning (GLW: NYSE)
By Susquehanna Financial Group ($18.36, Feb. 10, 2014)
Following last Friday's analyst day, we believe Corning is positioned well for new growth opportunities. However, we remain on the sideline at the current share price given the glass-pricing trends and lack of upside to calendar 2014 earnings-per-share estimate.
Corning (ticker: GLW) held its annual investor meeting on Friday, Feb. 7, in New York City during which the company discussed its next-growth drivers including Willow glass (for flexible display app), new application for its Gorilla cover glass (while also arguing Sapphire is not a threat), Antimicrobial cover glass, and the Wireless Optical Distributed Antenna System (DAS).
In addition, Corning stated its key objectives for its main Display business, including bringing average sale price (ASP) decline to average trend line (by spring time frame), and better margin profile following the acquisition of Samsung's share in their joint venture. The company currently expects glass ASPs to decline at a higher-than-normal rate in the first quarter, but is optimistic to see the decline to return to moderate rate in the second.
Nonetheless, we currently see limited upside to our calendar 2014 EPS estimate of $1.42 versus consensus $1.45, and thus remain on the sideline at current share price.
We rate Corning at Neutral. Downside risk is $12, or 1.5 times forward enterprise value/sales to reflect a downturn.
In the Display business unit (33% of total fiscal 2013 revenue, accounting for 70%-plus of overall net-operating profit after tax (Nopat)): 1) stabilizing its Display business is Corning's key objective for FY14; 2) expect higher-than-normal glass ASP decline in the first quarter, but quarter-over-quarter ASP decline could return to normal trends by the second quarter; 3) competitors shutting down old glass capacities will positively impact glass supply/demand environment in the second-half of calendar 2014; 4) expect Lotus glass to capture growth in high-performance display (HPD) market, which is projected to grow at 35% compounded-annualized-growth rate (CAGR) from 2013 to 2017; 5) expect Willow glass to be finally commercialized for flexible displays application in the second-half of calendar 2014.
In Specialty Material, including Gorilla cover glass (15% of total revenue, 10% of overall Nopat): 1) expect Gorilla to return to growth in calendar 2014; 2) expect further cost reduction here to help improve margin profile; 3) Gorilla is adopted by automakers such as BMW, and Corning expects to expand into airplane and train markets; 4) near-term growth drivers for Gorilla are the increasing numbers of touch devices and larger average touchscreen size; 5) Corning does not expect much challenge from Sapphire since the company believes Gorilla is superior in performance, cost and weight; 6) new antimicrobial cover glass is a new and incremental growth driver.
In Optical Solutions (30% of total revenue, 10% of overall Nopat): 1) Corning's new revenue driver of One Wireless Optical DAS could capture the potential opportunity in the commercial building in the U.S.; 2) cloud computing, big data, data centers are driving demand for optical solutions; 3) Corning expects fiscal 2014 segment sales and profit of more than two times the telecom industry capital-expenditure rate.
In Environmental (12% of total revenue, 7% of overall Nopat): 1) several demand drivers are new regulations in China and EU could drive demand for regulated heavy-duty autos at 15%-20% CAGR until 2017 and, in North America, LEVII and Tier 3 regulations require 75% reduction in emission, and the new gasoline direct injection (GDI) engines require new filters that have a market size of $1 billion; 2) Corning expects Environmental gross margin to improve.
In Life Sciences (11% of total revenue, 4% of overall Nopat): 1) Corning expects double-digit profit growth here in calendar 2014 to reach $900 million (above our estimate of up 4% year-over-year); 2) the growth here is driven by increased content, e.g., per $1,000 in drug sales, Corning's potential sales is $33; 3) Life Sciences has provided relatively good returns given its low capital expenditures and research-and-development spending requirement; 4) Corning has no plan to spin-off Life Sciences.
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|From: Asymmetric||3/9/2014 3:28:26 PM|
|Corning Stock Should Keep Grinding Higher |
By STEVEN M. SEARS / Barrons March 6, 2014
The shares are a bet on wearable technology; this options trade boosts your return as the stock climbs.
A funny thing keeps happening to Corning : The stock continues to climb even though the company is as appealing to many investors as dinner with an IRS agent.
On Wednesday, the stock (ticker: GLW) rose to a 52-week high of $19.82 in the absence of any real news other than a day-old story about an accelerated share-buyback program.
This stock has been a favorite of the Striking Price since June 2012 when the stock traded around $13 and the company had just announced Willow Glass, an ultrathin, flexible product that bends like plastic. Since then, the stock has advanced some 53% amid widespread investor skepticism.
The stock has advanced despite a consensus view on Wall Street that Corning's dominant display business line, which accounts for about 33% of total fiscal 2013 revenue, was a major drag due to pricing troubles. Everyone already owns a flat-screen TV.
In the options market, where traders express their view of the future, trading patterns indicate expectations that Corning will set higher highs in the stock market.
The most widely owned contract is Corning's January $22 call that expires in 2016. That the May $19 put and May $20 put are the next most widely held positions is evidence that enough skepticism toward Corning's future still exists despite the rally. This is good.
If everyone agreed Corning's stock was the place to be, the stock would probably lose steam. Why? Because investors tend to go all in when they like a stock, and there's no money left to fuel further gains.
If you believe in wearable technology, which Corning's Willow Glass makes possible, it is not too late to still establish a position.
With the stock at $19.65, investors can sell Corning's August $18 put for 68 cents. If the stock dips below $18, investors are obligated to buy the stock or pay top-dollar to buy the put. Investors who want to build a position in the stock can buy the stock and sell the put.
Of course, it is hard to overlook the shadow Corning's display business casts over the company, but the stock keeps grinding higher, and that is a fact that is even harder to ignore.
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|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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|From: Asymmetric||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.
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|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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|From: Asymmetric||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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|From: Asymmetric||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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