Corning lowers 2001 outlook for third time

Fiber-optic giant Corning issued its third profit warning this year, ratcheting down its estimates for 2001 while maintaining first-quarter projections. The usual suspects--slower telecommunications spending and a slumping economy--were blamed.

Corning (NYSE: GLW) was down 72 cents to $23.18 Monday morning. Corning makes optical fiber, cable and photonic products for the telecommunications industry.

On March 1, the company announced it would slash 825 employees from its photonic technologies business. That was a couple weeks after the company had forewarned that bad news from Nortel (NYSE: NT), one of its biggest customers, could result in job cuts. At that time, it was forced to lower revenue projections for the full year, though it maintained projections for the first quarter. That was already the second time Corning had warned; the stock took a dip in late January when the company topped estimates for its fourth quarter, but delivered a grim outlook.

Corning hasn't changed its first-quarter pro forma earnings estimate of 28 cents to 31 cents per share, but it ratcheted full-year expectations down even further. Its outlook for 2001 pro forma earnings has been lowered to $1.20 to $1.30 per share from its previous projection of $1.40 to $1.43 per share. That estimate puts earnings flat, with earnings of $1.23 per share in 2000.

The company also said 2001 revenues should be in the range of $8.2 billion to $8.5 billion. First Call's consensus estimate is $8.41 billion.

Lower revenues can be blamed on the company's photonic technologies business, which is now expected to grow 20 percent to 25 percent, drastically lower than the previously expected 50 percent. Corning's original projection called for growth of 75 percent to 90 percent.

Corning also said more layoffs could be on the way. "We are moving aggressively to implement more stringent cost control plans and we are reviewing the need for additional workforce reductions," CEO John W. Loose said in a statement.

On a positive note, the company said that it continues to maximize optical fiber manufacturing capacity, and is reallocating optical fiber volume to customers it has previously been unable to supply, thereby broadening its international customer base.

However, the expected demand for its premium fiber products, as a percentage of total fiber demand, is now lower than previously anticipated, about flat with last year's level.

Corning added that it expects worldwide fiber market growth to be 20 percent this year and that its growth in fiber volume will be in line with the market.