CORNING, N.Y., July 22 -- Corning Inc. today reported a second-quarter loss of $22 million but expressed optimism it will return to profitability in the third quarter.
The net loss includes $47 million of after-tax charges, primarily related to the shutdown of Corning Asahi Video Products Co.; the planned exit from its photonics business; and its asbestos liability settlement.
Second-quarter sales of $752 million exceeded Corning's guidance range of $715 million to $745 million and increased from first-quarter sales of $746 million. The company said it expects third-quarter sales to be in the range of $740 million to $765 million.
"We are pleased that our results exceeded our second-quarter guidance," said James R. Houghton, chairman and CEO, in a statement. "This performance gives us confidence that we will achieve our goals for the year. We continue to maintain our focus on managing costs, paying down debt and investing in future technologies."
Corning's technologies segment recorded a sales increase that it attributes to continued strong performance of its liquid crystal display (LCD) glass business. It said the growing popularity of notebook computers and increasing market penetration of LCD desktop monitors fueled the quarter's growth. In the second quarter, LCD desktop monitors outpaced cathode ray tube monitors for the first time, achieving a level of 52 percent of the US market. These gains were partially offset by lower sales in the company's semiconductor business, Corning said. Telecommunications segment sales were $347 million, a slight decline from $352 million in sales for the first quarter.
"As expected, the quarterly sales decline was due to lower fiber and cable volumes in Asia, resulting from seasonal slowdowns in Japan," Corning said. "Fiber volume declined in the second quarter by 20 percent, slightly less than expected. Fiber pricing in the second quarter was down about 5 percent. The fiber and cable sales decline was partially offset by sequential increases in the hardware and equipment business."
James B. Flaws, vice chairman and CFO, said, "We continue to be pleased by the strength of our LCD business. This business has certainly hit its stride and it is providing Corning with significant opportunity for growth and profitability." Flaws added that signs of stability across the telecommunications sector are giving the company some cause for optimism.
"The preliminary FCC ruling on fiber deployments is also very promising for the industry and we have been further encouraged by the announcement of three regional Bell operating companies to work together in developing standards for future fiber-to-the-premises investments. However, we do not expect any significant revenue impact this year from these developments," Flaws said.
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