Corning's Revenue Stream of the Future
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Revenue Miss
Corning (NYSE: GLW) hit a new 52-Week low of $11.11 and is showing strong upper resistance at about 12.32. Even though the stock looks like it is in the slumps, Standard and Poors still gives it a 5 star buy rating. This quarter, it reported revenues of $1.9 billion, barely short of the $2.02 analysts projected. Net income fell to $462 million, or 30 cents a share, from $755 million, or 47 cents, a year earlier. This may have been a contributing factor to its knee jerk decline. Even though the stock is at a low, I believe it is still one of the best long term investments in the market today because of its new source of revenue.
New Markets are Explored
Corning, as any good company, does not sit idle. It is searching for and expanding into new glass markets. Since the LCD television market continues to mature, it is turning to other markets. One that investors may be familiar with is the Gorilla Glass used in mobile devices from Apple (NASDAQ: AAPL) and Samsung. Steven Fox, an analyst with Cross Research said:
“The No. 1 thing most people are concerned about with Corning is the impact of economies on LCD TV demand. Gorilla Glass and other products will help make up for some of the loss.”
It was in 2011 that global TV shipments fell for the first time in more than five years because of excess inventories. With the economic slowdown, inventories rose and demand fell.
Revenue Stream of the Future for Corning
The company recently showcased its Gorilla Glass product, and it is this larger glass that has the potential to bring an entirely new revenue stream together for Corning. This will take place in the form of large screen multi-touch devices and large screen display solutions. The larger glass brings better durability and this translates into limitless possibilities.
As an example, the company is partnering with a company called Perceptive Pixel. Founded in 2006, the Perceptive Pixel specializes in research, development, and production of multi-touch interfaces. Together, both these companies will combine technologies to offer large-screen multi-touch devices. A new 55 inch multi-touch LCD display with Gorilla Glass from Pixel will be thin, light weight, and durable. With another business—Chillin Solutions, it will explore large-screen display solutions also. This company’s 55 inch outdoor display and 70 inch display device will also feature Gorilla Glass. Both companies will have very strong, damage resistant products that will stand up to an outdoor environment.
Large outdoor multi-touch screens are a huge market for the future. They will be used to provide information in numerous industries, including (but not limited to): transportation, hospitality and entertainment. It has been projected that the “public display market” will increase by 15 percent to reach 3.1 million units in 2012. And the projected 10-year compounded annual growth rate for the same stands at 25 percent to reach 12 million units in 2018. Corning’s large-sized Gorilla Glass is well-positioned to capture market share. For this reason Corning should create a new and large revenue source in the years to come. This is a nice long term vision for the company.
Insider Buying
Within the last six months, insider buying at Corning has come to light. A total of $1.9 million was spent by Gordon Gund , Director at Corning, Inc on shares. Does Mr. Gund know something that investors don’t know? After all, he does have a unique inside view of operations compared to us. Come on—who in their right minds would invest that type of cash into something they thought would fail in the future? Maybe we should take notice.
The Motley Fool has no positions in the stocks mentioned above. johnmylant has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
