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Corning beats Street
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October 18, 2001: 6:02 p.m. ET
Nortel posts $3.5B loss; Corning reports pro forma income of 9 cents.
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NEW YORK (CNNmoney) - Corning Inc. beat Wall Street estimates Thursday by more than a nickel, while Nortel Networks took a huge $3.47 billion charge.
Excluding $339 million in pre-tax restructuring charges, Corning reported pro-forma income dropped 74 percent to $85 million, or 9 cents per share, compared with $317 million, or 35 cents per share, for the same time last year.
Analysts polled by First Call had expected Corning (GLW: Research, Estimates) to report a profit of 3 cents per share for the third quarter.
Corning Inc., the world's largest maker of fiber-optic cable, earlier this month warned that it expected third-quarter operating earnings of 2 cents-to-6 cents a share. This is down from Wall Street's previous estimates of 12 cents.
Corning said Thursday the deteriorating global economic conditions has affected all its businesses. "The downturn has been most pronounced within the telecommunications market, where conditions changed so abruptly and with such severity that the impact on our business is unprecedented," said Corning CEO John Loose.
Sales dropped 21 percent to $1.5 billion due to the downturn in the telecommunications segment.
Corning will begin idling its optical fiber plant manufacturing operations next week and fourth-quarter earnings will be negatively impacted, the company said. Fourth-quarter fiber volume will also be less than half of last year's.
The Corning, N.Y.-based company expects fourth-quarter sales in the range of $1 billion and pro forma losses of 20 cents-to-25 cents a share. Corning foresees costs savings of $400 million pretax from the third-quarter charge and expected fourth quarter actions.
So far, Corning has taken a pre-tax restructuring charge in third quarter of $339 million and expects costs to total $1 billion. The company has announced workforce reductions and will cut a total 12,000 jobs by the end of the year. Capital spending next year will be in the $700 million range.
Shares for Corning closed down nearly percent to $8.02. In after-hours trading on Instinet, shares gained 38 cents to $8.40.
Nortel's huge charge
Separately, Toronto-based Nortel Networks (NT: Research, Estimates) reported third-quarter losses from continuing operations of $854 million or 27 cents a share, excluding charges. Earnings tracker First Call expected Nortel to post a 28 cent per share loss for third quarter.
Including charges, its pro forma net loss was $2.18 billion, or 68 cents a share, compared with $597 million, or 19 cents a share, for the same time period in 2000. All told, the fiber-optic networks provider posted a net loss from continuing operations of $3.47 billion, or $1.08 a share.
Earlier this month, Nortel announced plans to chop its staff by 30 percent and expected to lose $3.6 billion in third quarter. Nortel reiterated its expectations to reduce its work force to 45,000 and that work force reductions in 2001 will come to 10,000.
"The company is in the final stages of implementing a cost structure to drive break even [results] at a quarterly revenue level well below $4 billion," Nortel CEO John Roth said. "The structure is expected to be in place in the first quarter 2002."
Revenue dropped 45 percent to $3.7 billion from $6.7 billion in 2000.
Nortel declined to provide future earnings guidance but said it is seeing early indications that capital spending by service providers is approaching sustainable levels.
Shares for Nortel closed at $5.92 and dropped 2 pennies in after hours trading to $5.90. 
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