Mar 19, 2001 12:00 PM,

Corning cuts 2001 earnings guidance

Glenn Bischoff

Corning announced today that it is reducing its pro forma earnings guidance for 2001 to $1.20 - $1.30 per share, from $1.40 - $1.43 per share. The revised guidance is more in line with the company’s 2000 pro forma earnings of $1.23 per share.

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Corning now anticipates 2001 revenues will range from $8.2 billion to $8.5 billion, still an increase over the $7.1 billion posted in the year previous.

The company had affirmed its original earnings guidance just a month ago. However, in conversations with both its fiber and photonics customers over the past couple of weeks, it became clear that its order rates were going to be lower than expected, due to the continuing downturn in the economy, according to a Corning spokesman.

The company’s photonics business in particular is bearing the brunt of the slump. Corning had been forecasting revenue growth of 50% in 2001 for this segment, but has since slashed that figure to 25%

“We announced back in February that we were changing our photonics growth to 50%. We thought at that time, based on what our customers were telling us, that we would see a turnaround sooner rather than later, and that’s really not holding up,” the spokesman said. “[We expect] that turnaround is going to be later into the second half of the year, as opposed to the second quarter, so we’ve taken that number down again.”

Comparatively, the company’s fiber business continues to hold steady, the spokesman added.

“Although we did say in January we were seeing some softening in fiber orders, we did not anticipate that to be an issue,” he said. “What we have seen now is that our fiber volume continues to be steady, and we’ll be at about 20%, which is consistent with last year, and which is what we said at the beginning of the year we would do. And that’s being driven primarily by capacity constraints.”

Despite adjusting its guidance for the year, Corning did not change its pro forma earnings guidance for first quarter 2001, which remains at $0.28 - $0.31 per share, up from $0.23 per share a year ago.