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These new products will demonstrate the company’s leadership in specialty glass and fiber optic technologies. Corning stated that its new glass, Gorilla Glass 3, is incredibly strong and durable, with the ability to protect the displays of millions of devices around the world. Also, it is three times more resistant to scratches and offers a 40% reduction in visible scratches.
Corning’s Gorilla Glass is a key component in many tablets and smartphones. The glass is used in LCD TVs, multi-touch displays for education and many other applications. Robust U.S. demand for big-screen televisions and the introduction of various new consumer electronics products is increasing the demand for Gorilla Glass.
Many products like Google's ( GOOG - Analyst Report ) Nexus 4 smartphone and Nexus 10 tablet feature Corning's Gorilla Glass 2. Also, devices from Apple Inc. ( AAPL - Analyst Report ) and Samsung Electronics Co., which use Corning’s glass, are witnessing higher demand from the Chinese market. Although none of the manufacturers have confirmed the use of Gorilla Glass 3 in their 2013 products, we expect Corning to make some announcements soon, seeing the strong demand for Gorilla Glass 2.
According to research firm IDC, the tablet market is poised for major growth in the coming years. The tablet market is expected to grow at a compound annual growth rate (CAGR) of 23.3% from 2012 to 2016 with Apple’s iOS taking the top spot with 49.7% market share in 2016.
Thus, based on growth opportunities present in the tablet market and the success of Gorilla Glass 2, Corning’s Gorilla Glass 3 is likely to witness strong demand going forward.
Recently, the company provided an improved glass outlook for the fourth quarter, indicating higher global demand for cover glass used in tablet computers and LCD TVs. However, the downward pressure on glass prices is expected to continue, which might impact results in the fourth quarter and beyond.
Corning is primarily a developer of advanced glass substrates for multiple markets. The company’s third quarter earnings beat the Zacks Consensus Estimate by 2 cents or 7.1%. Revenues of $2.04 billion were up 6.8% sequentially but down 1.8% from the year-ago quarter.
However, excess capacity in the market place, price pressure and competition remain challenges for Corning’s glass business.
Currently, Corning has a Zacks #3 Rank (Hold).
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