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Corning 2Q beats Street
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July 25, 2001: 5:02 p.m. ET
Fiber optic cable maker sees profit 11 cents better than Street estimates
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NEW YORK (CNNfn) - Fiber optic cable maker Corning Inc. said Wednesday that second quarter profit fell below year-ago levels but still came in well ahead of Wall Street estimates.
For the quarter ended June 30, Corning (GLW: Research, Estimates) reported earnings of 29 cents a share on revenue of $1.9 billion, sharply lower than the 31 cents a share it earned a year earlier on revenue of $1.8 billion.
Analysts had expected a profit of just 18 cents per share, according to earnings tracker First Call.
Corning's results, which came out after the close of trading, exclude a $273 million, or 20 cents a share, pre-tax charge to write down excess and obsolete inventory in its Photonic Technologies business. The figure also excludes acquisition and restructuring-related charges.
Corning's shares, which ended Wednesday's session up 26 cents at $13.77, headed higher in after-hours trading to $14.20.
The company, which did not provide future earnings guidance, said it would further discuss second quarter results in a conference call with analysts scheduled for 8:30 a.m. ET Thursday.
Including the write-down charge, a pre-tax $4.8 billion charge for goodwill and other intangible assets and an $8 million pre-tax charge for restructuring, the company reported a net loss of $4.8 billion, or $5.13 a share, compared with net income of $149 million, or 17 cents a share a year earlier. Last year's net income includes a $51 after-tax research and development charge.
"The telecommunications market outlook remains turbulent," CEO John Loose said in a statement. "We continue to see a very significant decrease in the long-haul market in North America."
The earnings follow Corning's July 9 announcement that it would record more than $5 billion in charges, shutter three manufacturing plants and lay off 1,000 more employees as it continues to rein in costs amid a protracted downturn in its end markets.
The company said these measures would bring an unspecified charge against third quarter earnings.
Corning, based in the upstate New York town of the same name, is a leading supplier of fiber-optic cable and photonic components used in high-speed telecommunications networks.
Loose said the market decline has most severely impacted sales of the company's LEAF fiber to new carriers and hurt its photonics business. It was able to stanch some of the losses through fiber sales in China, but he projected the photonics business will "continue to be weak for the remainder of the year."
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Weakness in photonics is what prompted Corning to cut 3,500 jobs from the division, bringing company-wide job cuts to 5,900, or about 15 percent of its workforce so far this year.
The company reported smaller gross margins as well as increased operating and research expenses in the quarter.
However, Loose said he was encouraged that Corning's market shares in key businesses have remained stable amid the soft economy.
Photonics components are used to transmit light waves across fiber-optic networks. The market for such components has deteriorated this year as a result of a sharp slowdown in capital spending by telecommunications service providers. JDS Uniphase (JDSU: Research, Estimates) , the world's largest supplier of photonic components, has reported similar weakness and has been lowering its revenue and earnings targets as well. 
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Corning
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