Corning cuts 2001 estimates for third time

After market close Thursday, the world's largest seller of optical fiber reported first-quarter earnings that topped estimates, but it also announced layoffs and predicted a 2001 profit ranging from 90 cents to $1 per share, down from its previous target of $1.20 to $1.30 per share.

Thursday's announcement marked the third time in three months that Corning has told analysts to cut forecasts. The job cuts will bring the company's total layoffs this year to 4,300 people.

The latest analyst consensus prediction called for a full-year profit of $1.16 per share, according to earnings tracking firm First Call.

Shares of Corning traded at $21.31 in after-hours activity on the Island ECN after the report. Corning fell 98 cents to $21 in Thursday's regular trading ahead of the news.

Corning, which also makes flat-panel displays and optical networking components, now sees second-quarter earnings ranging from 18 cents to 21 cents per share, on revenue of $1.8 billion to $1.9 billion. First Call consensus had predicted a profit of 28 cents per share, on revenue of $1.98 billion.

The past several months have seen virtually every major supplier to the optical networking industry warn of lower demand. JDS Uniphase, the biggest supplier of parts for optical networks, earlier this week slashed its quarterly expectations.

"In effect, we're seeing the same thing happening with Corning, with their Photonic Technologies unit," said Josephthal analyst Lawrence Harris.

First-quarter sales of Corning's Photonic Technologies division, which produces optical components, slid 32 percent sequentially, mainly because of lower demand for amplifiers used to boost network signals. Corning now believes second-quarter revenue for Photonic Technologies will not grow year over year.

Trimming jobs, capital budget
Company executives unveiled plans to cut 1,000 jobs in the optical components business, bringing that division's total job cuts to about 2,500 for the year. Including the latest plans, Corning will have cut 4,300 jobs overall for the year. More layoffs are possible, said CEO John W. Loose.

The company also plans to cut its overall capital budget by 20 percent and lower inventory.

Like its peers, Corning suffers from the overall downturn in technology, Josephthal's Harris said.

"When you get to Corning's size, it's kind of tough to avoid the marketplace," he said. "They're doing the types of things they ought to be doing, but the technology portion of the U.S. economy is in a recession, and that's a simple fact."

First-quarter results
Corning posted first-quarter net income of $277 million, or 29 cents per share, excluding goodwill write-downs. First Call consensus predicted a profit of 28 cents per share for Corning's first quarter, which ended March 31.

First-quarter revenue increased 42 percent year over year to $1.9 billion, roughly in line with First Call's projection.

Optical fiber volume rose 25 percent from the year-ago period. Flat-panel glass volume grew 20 percent, but revenue didn't grow because of the U.S. dollar's strength against the Japanese yen, the company said.

Revenue in 2001 will range between $7.8 billion and $8 billion, Corning said. Full-year revenue estimates for analysts surveyed by First Call averaged $8.27 billion.