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Apple glass supplier Corning warns smartphone sales down 14%


When heated to high temperature and then cooled, a new chemical composition can change the behavior of the glass. For Gorilla Glass, Corning reduces the number of compositions to a few dozen, melts more, and then chooses two or three candidates to test. It may take one to three years of testing to reach the single composition that Corning ends up putting in the next generation of Gorilla Glass.

Corning

Corning Shares fell more than 4% on Tuesday morning after the company announced a weaker-than-expected outlook for the current quarter, blaming slow smartphone glass sales.

Corning makes a variety of different components and supplies many of the big electronics companies, like Samsung and Apple, which report earnings this week amid concerns about slowing consumer electronics sales. But there’s optimism that the slowdown in electronics sales won’t hurt the high end of the market as much as cheaper devices.

Corning said it expected $3.55 billion in base or adjusted sales for the fourth quarter, below a FactSet analyst consensus of $3.75 billion.

The company said it would wait to see positive signs before telling investors about the company’s future takeover.

In the quarter ending September, Corning saw smartphone unit sales decline 14% year on year, and demand for tablets and laptops fall 17%, the Corning CEO said, Wendell Weeks, during an earnings call. He added that annual auto production is also lagging behind the previously expected pace.

“So now the question is when will the glass market recover? Weeks asked. “My response is that we would like to see additional positive evidence before guiding a robust recovery in glass demand.”

Corning’s largest business is manufacturing cables and components for fiber optic systems, which grew 16% to $1.31 billion in the quarter.

But the company saw a 28% annual decline in the quarter to $686 million in sales in its display technologies division, which makes glass for smartphones and other computer displays.

And the consumer electronics downturn doesn’t appear to be improving this year, Weeks said.

“We now expect smartphones to be down about 12% for the year, and we expect demand for laptops and tablets to be down 15%,” Weeks said. “We expect the year-over-year decline in smartphones, laptops and tablets to be larger in the second half than in the first half.”

Corning reported third-quarter revenue of $3.49 billion, below the FactSet consensus of $3.66 billion, and adjusted earnings per share of 51 cents, in line with expectations.

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