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Corning beats, warns
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April 26, 2001: 4:49 p.m. ET
Fiber-optic equipment maker sees lower 2001 sales, profit, due to U.S. slowdown
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NEW YORK (CNNfn) - Corning on Thursday reported a first-quarter profit that narrowly beat expectations on sales that rose 42 percent from the same period a year earlier.
But executives at the fiber-optic equipment maker lowered their financial targets for all of 2001, citing the sharp slowdown in capital spending by telecommunications service providers, particularly in the United States.
Corning is a leading supplier of fiber-optic cable and photonic components used in high-speed telecommunications networks.
After the closing bell, Corning said it earned 29 cents per share during the quarter ended March 31, excluding one-time and other extraordinary charges. The results exceeding by a penny the consensus estimate of analysts polled by earnings tracker First Call and compare with an operating profit of 23 cents per share during the same period last year.
At $1.9 billion, Corning's first-quarter revenue rose 41 percent from $1.35 billion during last year's first quarter.
Twice during the quarter, Corning (GLW: down $0.98 to $21.00, Research, Estimates) lowered its financial targets, pinning the blame primarily on cancelled orders from Nortel Networks, a key customer.
When it last warned on March 19, Corning said it had been expecting sales in all of 2001 to range between $8.2 billion and $8.5 billion, compared with $7.1 billion last year. At that time, they had forecast operating earnings per share for the year of $1.25.
Executives lowered the bar again Thursday, laying the blame on continued weakness in telecom capital spending. The company now is aiming for sales in 2001 ranging between $7.8 billion and $8 billion and an operating profit ranging between 90 cents and $1 per share.
"Capital availability constraints in the market are negatively impacting carriers' ability to build and upgrade networks, contributing to recent significant reductions in high-data-rate fiber demand from our top customers," John W. Loose, Corning's president and chief executive, said in a statement.
The company now expects its fiber-optic cable volume to grow at a rate of 15 percent-to-20 percent, and also expects premium fiber products, as a percentage of total fiber volume, will be approximate 25 percent.
Corning is expecting its 2001 shipments of photonic components, which are used to transmit light waves across fiber-optic networks, to be approximately flat with last year's levels. The company blamed the slowdown on lower sales of optical amplifiers due to a glut of inventory of such components.
Earlier this week, JDS Uniphase, the No. 1 supplier of optical networking components, also warned of a substantial revenue and profit shortfall this year.
In response to the downturn in its end markets, Corning said it has implemented its own capital spending cuts, amounting to a roughly 20 percent decrease. Loose said Corning also is moving aggressively to lower its inventory levels for the year and has been reducing staff as well.
The company on Thursday announced an additional 1,000 job cuts from its photonic technologies business, bringing it total work force reduction this year to about 4,300.
Corning said it might take a restructuring charge in the second quarter as a result of these and potential future workforce reductions, but it was not specific.
Executives are expected to provide further details during a teleconference with analysts Friday morning. 
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