I've been unable to access SI all morning. That's like being denied that first double cappuccino. :)
Whoever shook the tree this a.m. got a good deal. Stock now at 282 on 3.15M.
Okay, here's what I've found so far on GLW. These are rough notes, in no particular order, selected to show where they're positioned in the telecom side of their business.
<<<<<
First, look at how they handled NetOptix:
I --- NetOptix acquisition in which they became a fully-owned subsidiary:
freeedgar.com
CI Subsidiary, Inc. is a wholly-owned subsidiary of Corning, formed under the laws of the State of Delaware solely for purposes of acting as a party to the merger. CI Subsidiary, Inc. will merge with and into NetOptix and NetOptix will be the surviving corporation. . . .
On February 13, 2000, Corning entered into a letter agreement with Ralf T. Faber, the President of NetOptix, to clarify the terms of his continued employment after the closing date of the merger. Under the letter agreement, Mr. Faber has agreed to serve as the President and CEO of Corning NetOptix, Inc. the proposed new name of NetOptix, for a term of three years.
The company is divided into three units, telecommunications, advanced materials, and information display.
Financials, three months ended March 31, 2000 1999
Telecommunications
Net sales $ 893.4 $ 593.3
Advanced Materials
Net sales $ 264.2 $ 252.1
Information Display
Net sales $ 187.9 $ 145.7
Total segments
Net sales $1,345.5 $ 991.1
By looking at acquisitions over the past year, it's obvious this is not the old Corning:
(2) On January 28, 2000, Corning merged with Oak Industries, Inc. (Oak Industries) in a pooling of interests transaction. Oak Industries shareholders received 0.83 of a share of Corning common stock for each share of Oak Industries stock owned. Corning issued 14.8 million shares of Corning common stock and 2.7 million options to purchase Corning common shares to complete the transaction. The consolidated financial statements for the prior period of 1999 have been restated to include the financial position and results of operations of Oak Industries. During the first quarter of 2000, Corning recognized a charge of $47.0 million ($43.4 million after tax), or $0.16 per share, for one-time acquisition costs related to Oak Industries. The acquisition costs are primarily related to investment banking and legal fees of approximately $30 million. The charge also includes $17 million of severance and other termination benefits for Oak Industries corporate officers and headquarters employees.
(3) On February 2, 2000, Corning acquired the worldwide optical cable and hardware business of Siemens AG and the remaining 50% of its investment in Siecor Corporation and Siecor GmbH (the Siemens transaction). The purchase price of $1.4 billion (subject to customary purchase price adjustments) includes approximately $120 million in assumed debt and $145 million in contingent performance payments to be paid, if earned, over a four-year period. Portions of the transaction will close at various dates into 2001.
At March 31, 2000, total cash paid to Siemens approximated $1.0 billion. This acquisition has been accounted for under the purchase method of accounting. The purchase price has been allocated based on estimated fair values at date of acquisition, pending final determination of certain acquired balances. This preliminary allocation has resulted in purchased intangibles and goodwill of approximately $650 million, which is being amortized over lives of 5 to 20 years.
(4) On February 14, 2000, Corning acquired British Telecommunication's Photonics Research Center for approximately $66 million in cash. Corning recorded a charge of $42.0 million ($25.7 million after tax), or $0.09 per share, for in-process research and development costs. Remaining purchase price has been recorded as property, plant and equipment and purchased intangibles and goodwill being amortized over lives up to 9 years.
(5) On February 14, 2000, Corning announced that it had signed a definitive agreement to acquire NetOptix Corporation for approximately 12 million shares of Corning common stock. NetOptix manufactures thin film filters for use in dense wavelength division multiplexing components. Under the terms of the agreement, Corning will exchange 0.90 shares of Corning common stock for each share of NetOptix common stock. Corning will account for the transaction under the purchase method of accounting. Based on the average closing price for Corning for a range of days surrounding the announcement, the transaction is valued at approximately $2.1 billion, most of which will be allocated to purchased intangibles and goodwill. Corning currently expects purchased intangibles and goodwill to be amortized over 10 years and to be non deductible for tax purposes. A study is currently underway to determine the existence of any in-process research and development. If the study concludes a charge is necessary, Corning will record the appropriate amount in the period the transaction closes. Corning expects the transaction to close in mid-May.
(6) On May 5, 2000, Corning acquired the remaining 80% interest in NZ Applied Technologies (NZAT) not already owned in exchange for Corning common stock. NZAT is a developer and manufacturer of photonic components for optical telecommunications applications including the optical data networks industry. Corning issued 440,000 shares of common stock, with a value of $75 million at closing and agreed to issue an additional 440,000 shares over the next three years contingent upon NZAT achieving certain product development and sales milestones following the completion of the transaction. The contingent proceeds, if earned, will be recorded at the current fair value of Corning common stock when issued. The acquisition will be accounted for using the purchase method of accounting.
(7) On January 31, 2000, Corning sold Quanterra Incorporated to Severn Trent Laboratories for $35 million. In the first quarter of 2000, Corning recorded a non-operating gain of $6.8 million ($4.2 million after tax), or $0.02 per share, as a result of this transaction.
Each of these transactions supports Corning's strategic growth initiatives in the Telecommunications segment.
. . . .
A company focused on high-growth segments of telecommunications' market:
Results of Operations
Net sales totaled $1.35 billion for the first quarter of 2000, an increase of 36% over sales of $997 million for the same period in 1999. Excluding the impact of acquisitions, net sales increased approximately 30% over the first quarter of 1999. Sales growth in the first quarter was most pronounced in the Telecommunications Segment, where the impact of acquisitions and demand for Corning's premium fiber and cable products drove quarter to quarter sales growth over 50%.
First quarter
Sales in the Telecommunications Segment increased 51% over the first quarter of 1999 to approximately $900 million. Excluding acquisitions sales growth for the same period was 45%. The sales growth in the segment was led primarily by volume gains in the optical fiber and cable and photonic technologies businesses. Segment net income rose 84% in 2000 compared to 1999. The percentage increase in segment net income exceeds the increase in sales, reflecting an overall increase in segment gross margin percentage and a decrease in research, development and engineering as a percentage of sales.
Sales in the optical fiber and cable business in 2000 increased 45% over 1999 to approximately $480 million. The increase in sales resulted primarily from the impact of acquisitions and strong volume gains. Approximately $30 million of the increase in optical fiber and cable sales resulted from the following acquisitions:
. the acquisition of the optical cable business from BICC, plc and the remaining 50% interest in Optical Waveguides Australia, Pty. Ltd. in the second quarter of 1999
. the acquisition of the remaining 50% interest in Siecor GmbH in the first quarter of 2000
Excluding the impact of these acquisitions, sales in the optical fiber and cable business increased approximately 35% for the year due to volume gains of more than 50%, reflecting continued strong demand for Corning's premium fiber products. Volume of premium fiber and cable products, including Corning's LEAF-Registered Trademark- optical fiber, tripled over the same period in 1999.
Price declines ranged between 5% and 15% for Corning's optical fiber and cable products in comparison with last year's first quarter. The weighted average optical fiber and cable price in 2000 declined approximately 9% compared to 1999. The rate of price declines for cabled fiber products slowed during the first quarter of 2000 commensurate with the worldwide tightening of supply of
optical fiber.
As a result of continued strong worldwide demand for optical fiber and cable, Corning continues to produce at maximum manufacturing capacity. In the first
quarter, Corning announced an approximate $750 million expansion of its Concord and Wilmington, North Carolina fiber production facilities. The expansions are expected to come on-line between 2001 and 2002 and increase capacity more than 50%.
Net income from the optical fiber and cable business increased more than 50% in the first quarter of 2000 compared to the same period in 1999. The percentage increase in net income is higher than that of sales because increased volume of higher margin products more than offset price declines.
Sales in the telecommunications hardware and equipment business, including the Gilbert Engineering business acquired in the Oak Industries merger, increased 59% in the first quarter of 2000 to approximately $185 million. This increase resulted primarily from a higher volume of existing products and particularly strong demand from cable television customers, offset in part by price declines and the impact of the sale of Republic Wire and Cable in the third quarter of 1999. Overall net income increased more than 75%, primarily due to volume increases.
The photonic technologies business, including the Lasertron -Registered Trademark- business acquired in the Oak Industries merger, manufactures photonic modules and components primarily for the optical amplification market. This business realized strong volume gains in the first quarter 2000 led by new product sales. Sales in this business increased approximately 90% in first quarter 2000 to approximately $175 million compared to 1999 prior period sales of approximately $90 million. The operating performance in this business improved in 2000 as a result of strong volume and productivity gains partially offset by price declines and increased operating expenses. Due to continued investment in research and development, this business continues to incur a loss, however, the overall first quarter results improved approximately 50% in
comparison to first quarter 1999. In April, Corning announced the addition of a second amplifier assembly plant in Benton Park, PA, with startup production expected in the third quarter of 2000. This expansion will more than double Corning's module and amplifier manufacturing capacity. Corning also announced a $45 million expansion of its Corning Lasertron facility in Bedford, MA that will double its manufacturing capacity in the first quarter of 2001.
. . . .
Recent news releases:
corning.com
Corning, New York, June 12, 2000 -- Corning Incorporated (NYSE:GLW) announced today that it has completed the previously announced acquisition of IntelliSense Corporation of Wilmington, Massachusetts. Corning had previously held a 33% equity ownership position in the company. A leading provider of micro-electro-mechnical systems (MEMS) software, design and fabrication, IntelliSense will operate as a wholly-owned subsidiary of Corning. It is anticipated that the company will enhance Corning?s development of optical switching products and cross-connects -- elements that will play a key role in the future development of all-optical networking.
corning.com
"We are seeing very strong volume gains in our growth businesses, similar to quarter one," said Roger G. Ackerman, Corning's chairman and chief executive officer. "We now expect revenue growth in our Photonic Technologies Division to reach 80% for the year 2000. We are continuing to focus our efforts on capacity expansions, integrating our acquisitions, and pursuing internal and external growth opportunities."
Chairman's address to annual meeting in April --- excellent summary of co's strength, esp. regarding Siecor acquisition:
corning.com
NetOptix acquisition closes:
corning.com
Quote from April shareholders' meeting:
Shareholders also approved an increase in the number of shares of authorized common stock from 500 million to 1.2 billion. The number or shares were increased to enable the company to act promptly on investment, acquisition and growth opportunities, or on proposals for stock splits or stock dividends.
>>>>
That's as much as I've gathered so far. GLW's focus seems clear and I think anyone would be blind not to recognize how serious they are in pursuing their goals.
On the other hand, today's news that LU might spin off its microelectronics' division reveals another player anxious to maximize its position in the same industry.
It must be nice being SDL right now.
Pat |
