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Fiber optics,telecommunications
kelly | fiberoptic

Corning’s Earnings Rise On Fiber Optics, Gorilla Glass, CPM

Nov 30th 2015 at 6:51 PM

Corning announced its first quarter 2015 results on Tuesday, April 28. The company’s GAAP revenues declined 1% due to currency-related headwinds. However, its core sales improved 4%, to reach $2.43 billion, driven by growth at its Optical Communications and Specialty Materials segments. Corning GLW -1.12%‘s Display Technologies and Environmental Technologies segments were also in the positive. Its Life Sciences segment reported a decline in core sales as a result of foreign exchange headwinds.

Corning’s core earnings increased 14%, to $484 million, driving a 21% increase in core earnings per share, to reach $0.35. The market was expecting earnings per share of $0.34. Despite the earnings beat, Corning’s stock declined 1.4% through the day, as investors did not welcome the prospects of lower revenue growth in the future due to currency headwinds.

See our complete analysis of Corning here

Optical Communications Drives Top Line Growth

The growing video content on websites and increased usage of cloud-based services has been driving internet traffic. The proliferation of smartphones and tablets has also added to the internet traffic by enabling easy access. In order to cater to the increased traffic, service providers have been forced to upgrade their networks from copper wire to optical fiber-based networks. This helped drive Optical Communications’ first quarter revenue by 18%, to reach $697 million. The segment’s net income and revenue also benefited from the integration of TR Manufacturing, a provider of fiber-optic and copper cable interconnects and electro-mechanical assemblies to original equipment manufacturers, which Corning had acquired earlier in January.

Going forward, we expect to see continued growth in Corning’s Optical Communications segment driven by the consolidation of TR Manufacturing and Samsung Electronics ‘ fiber optics business. Corning acquired Samsung Electronics’ fiber optics business on March 31. The acquisition led to the integration of Samsung’s fiber optic manufacturing facilities in South Korea and China into Corning’s Optical Communications division. The segment will also benefit from growth in internet traffic, which should drive demand for optical fiber. Cisco forecasts that the global network traffic will grow at an average rate of 23% every year through 2018.

Specialty Materials Grows On Gorilla Glass 4

Corning’s Gorilla Glass volumes were up 20% in the first quarter. We believe that the demand for Corning’s latest version of cover glass, Gorilla Glass 4, helped drive the growth in volumes. Most recently, Gorilla Glass 4 was featured on the Samsung Galaxy S6 and S6 Edge, which were launched on April 10. Samsung placed orders for 13 million units of the smartphones, which must have had a significant impact on Gorilla Glass 4 volumes, particularly because Gorilla Glass 4 has been used on both sides of the S6 and S6 Edge. We expect to see the same trend drive growth in the next quarter.

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