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Corning 2Q to beat Street
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June 12, 2000: 12:49 p.m. ET
Strong demand for Internet bandwidth, optical components, powers earnings
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NEW YORK (CNNfn) - Soaring demand for more Internet bandwidth is creating boom times for Corning Inc., a maker of equipment used in fiber optic networks.
Corning, based in a New York town that bears its name, raised its second-quarter earnings forecast Monday, citing strong demand for its optical networking products.
The announcement sparked a run-up in Corning's already lofty share price. The stock jumped 14-7/8, or 7 percent, to 226-7/8 in midday trading. Earlier in the day, the stock reached 231, a new 52-week high. Corning now sells for a price-earnings multiple of 113 and sports a market capitalization above $60 billion. The stock is almost quadruple its 52-week low of 57-1/4.
Corning (GLW: Research, Estimates) said profit for the quarter ending June 30 should be "well above" the First Call consensus of 69 cents per diluted share, projecting earnings between 78 cents and 80 cents per share. The company earned 52 cents per share in the corresponding quarter last year. The company is expected to post second-quarter financial results on July 24.
 Corning also said that it expects its full-year earnings to rise 45 percent above last year's $2 per share, up from its previous forecast of 35 percent growth for the year.
"We are seeing very strong volume gains in our growth businesses, similar to quarter one," CEO Roger G. Ackerman said. The company makes optical fiber and cable, as well as photonic products for the telecom industry and flat panel glass products for televisions. Photonic products consist mainly of amplifiers used to boost optical signals so that they can travel a longer distance.
Monday's announcement is the second time this year that Corning has forecast that its earnings would exceed analyst expectations. The company reported on April 24 that its first-quarter sales were $1.35 billion, an increase of 36 percent from the same period in 1999. Demand for the company's optical fiber increased by more than 50 percent, while sales in its Photonic Technologies division jumped 90 percent. Sales of flat-panel display glass used in computer monitors grew at a rate of 45 percent, the company said.
Several analysts increased their earnings estimates for Corning following Monday's announcement. Goldman Sachs analyst Mary Henry raised her firm's estimate for Corning's 2000 earnings per share to $2.90 from $2.75.
Goldman rates the stock a "market outperformer."
Merrill Lynch analyst Steven Fox on Monday raised his 12-month price target on Corning's shares to $275 and raised his cash earnings per share estimate for 2000 to $2.93 from $2.75. He lifted his estimate for 2001 to $3.70 from $3.45
"The upside is broad-based and due to a combination of better fiber unit and pricing trends, excellent momentum in the photonics business, surging demand for liquid crystal display glass, and better gross margins," Fox said in a research report.
Corning sells its products to networking companies such as Lucent, Nortel, Cisco, and Alcatel. Its main competitors in the photonics business are JDS Uniphase and SDLI. In the fiber business, it competes mainly with Lucent. 
-- Reuters contributed to this report
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Corning Inc.
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