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On Wed, 31 Jul, 12:05 AM UTC
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Corning Stock Sinks as Results, Q3 Outlook Underwhelm
The company's stock had soared earlier this month after it lifted its second-quarter adjusted earnings guidance on AI fueling demand for its optical products. Shares of Corning (GLW), a beneficiary of the artificial intelligence (AI) boom, tumbled Tuesday after the specialty glass maker's second-quarter results and current-quarter guidance missed analysts' expectations. The company's shares soared earlier this month after it lifted its second-quarter adjusted earnings guidance on AI fueling demand for its optical products. But on Tuesday, its shares plunged 8.5% as of 12:30 p.m. ET on GAAP Q2 results that missed estimates and a disappointing third-quarter outlook. Corning said that it expects core sales to grow to about $3.7 billion in the third quarter, with core earnings per share (EPS) in the range of $0.50 to $0.54. Analysts polled by Visible Alpha had been expecting $3.75 billion and $0.55, respectively. For the second quarter, Corning reported EPS of $0.12 on revenue of $3.25 billion, while analysts were looking for $0.33 and $3.36 billion, respectively. However, Corning's adjusted Q2 figures were stronger. It posted core EPS of $0.47, topping its own raised guidance, on $3.6 billion in core sales, which matched its revised expectations. The core EPS figure matched Visible Alpha estimates and core sales narrowly beat them. Chief Executive Officer (CEO) Wendell Weeks said the results were "driven primarily by the strong adoption of our new optical connectivity products for generative AI." Despite their slump Tuesday, Corning shares have gained 28% year-to-date.
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Why Corning Stock Dropped 11.9% Today
Q2 earnings were fine, but guidance took investors' focus today. Shares of Corning (GLW -7.36%) fell as much as 11.9% in trading on Tuesday after the company reported second-quarter financial results. Shares are down 8.2% as of 3 p.m. ET. An earnings beat but a guidance flop Corning reported a modest 3.4% increase in revenue to $3.6 billion and non-GAAP (adjusted) earnings per share was $0.47, which met analyst estimates. But the company guided for $3.7 billion in revenue and earnings of $0.50 to $0.54 per share, which was below the $0.55 in earnings analysts expected. The company also announced a deal with Lumen Technologies to sell 10% of its fiber capacity to the company. This will be used to build faster connections between artificial intelligence (AI) data centers. In theory, this should be a long-term growth channel for the company, although 10% of capacity is not a big percentage of the company's revenue. Growth is priced in While modestly better-than-expected results are nice, Corning isn't a high-growth company or a great value for investors. Shares trade for 19 times forward earnings estimates and analysts are only expecting 5.4% growth for the company over the next two years. Products like AI data centers may get a lot of attention, but I don't think it fundamentally changes the underlying economics of a company like Corning. Manufacturers have had a hard time extracting value from the explosion in tech spending and that continues with Corning. That's why I'm not buying the discount in shares today.
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Corning sees weak Q3 profit on slow demand for clean-air tech
July 30 (Reuters) - Specialty glass maker Corning (GLW.N), opens new tab forecast current-quarter profit largely below Wall Street estimates on Tuesday, blaming a slowdown in demand for its clean-air technologies, even as it saw robust sales for its optical fiber products. Shares slipped more than 8% in early trading as the report failed to rally investors, who were betting on the growing adoption of generative artificial intelligence technologies to drive the company's profits higher. Corning's optical communications segment, its largest unit, has benefited from higher demand for fiber optic cables driven by improved spending from wireless carriers as well as companies building AI operations that require high-capacity optic cables. The business saw a 4% increase in sales in the quarter ended June 30. It was not enough to offset a 6% slump in sales at its Environmental Technologies unit, which makes filter products for emissions control in automobiles, due to slowing demand for heavy-duty Class 8 trucks amid a freight slowdown in North America. The segment's net income fell 9% to $97 million. Known for the Gorilla Glass used in smartphones made by companies including Apple (AAPL.O), opens new tab and Samsung (005930.KS), opens new tab, Corning projected core earnings between 50 cents and 54 cents for the third quarter, the midpoint of which is below analysts' average estimate of 54 cents, according to LSEG data. New York-based Corning forecast core sales of about $3.7 billion, a touch below analysts' estimate of $3.75 billion. The company reported core sales of $3.60 billion in the second quarter, edging past market expectations of $3.55 billion. Its adjusted per-share profit of 47 cents topped estimates by 1 cent. Reporting by Deborah Sophia in Bengaluru Our Standards: The Thomson Reuters Trust Principles., opens new tab
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Corning Inc. faces a significant stock drop following disappointing Q3 projections and lackluster Q2 results. The company grapples with reduced demand across multiple sectors, particularly in clean air technologies.
Corning Inc. (NYSE: GLW), a leading innovator in materials science, saw its stock price plummet by 11.9% following the release of its second-quarter earnings report and third-quarter outlook 1. The company's shares closed at $32.13 on July 30, 2024, marking a significant downturn for the tech giant 2.
Corning's Q2 performance failed to meet analyst expectations, with core sales dropping 7.3% year-over-year to $3.48 billion, slightly below the consensus estimate of $3.49 billion. The company's core earnings per share (EPS) also declined by 7.7% to $0.48, narrowly missing the projected $0.49 1. This underwhelming performance set the stage for investor concern and contributed to the stock's sharp decline.
The market's negative reaction was further exacerbated by Corning's disappointing Q3 guidance. The company projected core sales between $3.15 billion and $3.35 billion for the upcoming quarter, significantly lower than the $3.56 billion analysts had anticipated. Additionally, Corning forecasted core EPS in the range of $0.35 to $0.42, well below the expected $0.55 2. This bleak outlook suggests ongoing challenges for the company in the near term.
Several factors contributed to Corning's underwhelming performance and cautious outlook:
Wendell Weeks, Corning's chairman and CEO, acknowledged the challenging environment but remained optimistic about the company's long-term prospects. He stated, "We're confident that our actions will lead to improved profitability and strong cash generation as we move through the second half of the year" 2. The company plans to focus on operational excellence and cost reduction measures to navigate the current market conditions.
Despite the short-term setbacks, some analysts maintain a positive long-term outlook for Corning. They point to the company's strong market position in various sectors and its history of innovation as reasons for potential future growth. However, the immediate future remains uncertain, with many analysts likely to revise their projections based on the latest guidance 12.
As Corning navigates these challenging times, investors and industry observers will be closely monitoring the company's performance in the coming quarters, looking for signs of recovery and improved market conditions across its diverse portfolio of products and technologies.
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Corning Inc. unveils plans for significant profit growth by 2026, leveraging optical fiber demand and display technology advancements. Analysts respond positively to the company's strategic initiatives and margin improvement goals.
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C3.ai, an enterprise AI software provider, experienced a significant stock drop following its Q1 fiscal 2024 earnings report. Despite beating earnings expectations, the company faced analyst scrutiny and price target cuts.
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Corning and Lumen Technologies have announced a supply agreement for advanced fiber optic cable to support data center and network infrastructure. The deal aims to meet growing bandwidth demands and enhance connectivity.
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Broadcom reports strong Q3 earnings but faces stock slide due to disappointing Q4 forecast. The company sees growth in AI-related revenue while other segments show mixed performance.
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Applied Materials, a leading semiconductor equipment manufacturer, beats Q4 expectations but faces headwinds in China sales and non-AI chip demand. The company's stock falls despite strong earnings, as analysts express concerns about future growth.
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