Lots of bad news from Corning

Citing rapidly deteriorating global business conditions across all its major units, Corning announced an expanded restructuring plan that includes more work-force reductions and the suspension of production at most of its worldwide optical-fiber manufacturing facilities.

As a result of these actions, Corning expects to post about $1 billion in charges during the second half of 2001, about $350 million of which will be recorded in the third quarter. The company estimates that two-thirds of the charges will be non-cash.

While the company did not provide guidance for the third quarter, Corning expects to post a pro forma loss, missing consensus analyst estimates of pro forma earnings per share between two cents and six cents.

The company also said that work-force reductions could reach 12,000 by year-end--50% more than the 8000 cuts already announced. The company’s peak 2001 employment was 43,000.

More than 400 of those job cuts will occur at Corning’s optical-fiber manufacturing facility in Deeside, North Wales. Corning is proposing shuttering that plant at year-end because of weakening demand for optical fiber in North America and Europe.

But that is not the only fiber plant affected by Corning’s plans. The company also intends to idle optical-fiber manufacturing at three of its other four facilities in late October. Production will resume in 2002 as business conditions improve.

“We will be keeping the Wilmington, N.C., facility open with substantially reduced manufacturing continuing,” said a Corning spokesman. “The other facilities…will be idled for the remainder of the year. For all practical purposes, we are basically shutting down optical-fiber manufacturing for the remainder of the year.”

The company’s Photonic Technologies business is suffering as well. Sales for 2001 are expected to be between $475 million and $500 million, down from the previously anticipated $600 million to $700 million. The company also expects sales for its liquid crystal display glass to decrease 10%.

To offset its slowing business Corning said it will cut capital expenditures for the year to $1.8 billion, down from $2 billion. Capital expenditures for 2002 should be less than $1 billion.

The company said it does not expect any significant market recovery to occur until at least the latter part of 2002 or into 2003.