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Jan 27, 2009

Corning to Cut 3,500 Jobs After Profit, Sales Plunge

Corning Inc., the biggest maker of glass for flat-panel televisions, will eliminate about 3,500 jobs this year after fourth-quarter profit plunged 65 percent on slowing demand for TVs and computer monitors.

The cuts, totaling 13 percent of the workforce, will be made through firings and early retirements, the Corning, New York- based company said today in a statement. Corning said it will incur restructuring costs of as much as $165 million, most of that for severance.

The company said sales may decline 15 percent to $5 billion this year. To compensate, Corning will reduce capital spending to $1.1 billion from $1.9 billion in 2008. People are curbing spending on TVs as the economy cools, and consumer-electronics makers are trimming orders for parts, including glass.

“If we’re wrong about the $5 billion sales level then we’ll probably be back in the middle of the year for some more job cuts,” Chief Financial Officer James Flaws said in an interview. “It’s very difficult to forecast in this environment.”

Corning climbed 4 cents to $9.99 at 4:01 p.m. in New York Stock Exchange composite trading. The shares dropped 60 percent last year.

The job cuts, a suspension in bonuses for salaried employees and factory consolidations will save as much as $200 million this year, the company said.

Global sales of liquid-crystal display TVs will fall 16 percent this year to $64 billion, the industry’s first decline, Austin, Texas-based researcher DisplaySearch said last month. Sales in Corning’s display-technology business fell 50 percent.

Net, Sales Fall

Net income in the fourth quarter dropped to $249 million, or 16 cents a share, from $717 million, or 45 cents, a year earlier. Sales fell 31 percent to $1.08 billion.

“The drop in net profits really reflects the obvious impact of the sales volume loss against our high fixed costs in our manufacturing facilities,” Flaws said. “We’re not operating close to full.”

Profit excluding an adjustment to Corning’s asbestos liability and other items was 13 cents share. Analysts expected Corning to earn 19 cents on sales of $1.13 billion, according to the average of estimates in a Bloomberg survey.

Panasonic Corp. announced this month that it was cutting investment in two factories as TV prices fall. Sony Corp. predicted a record operating loss because of weakening demand for consumer electronics. Corning, which also makes fiber-optic cables, gets more than 90 percent of its profit from the display- glass business.

Source : Bloomberg
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