GLW - Annual Meeting Report -
"No Lady Godiva Chocolates this year"
Somber mood to meeting. Jamie Houghton laid out the conditions bluntly-
The business environment (for telecommunications) is as bad as its ever been. GLW's revenues have dropped by 50%, even during Great Depression never got that bad. The conditions in telecom have deteriorated even from the outlook a few weeks ago. There is a strong sense that things have bottomed, but there is absolutely no visibility when a rebound will occur and what the strength of it will be. Corning's revenues a year ago were approaching $8 Billion, this year likely $4 Billion. The company was being sized for a business of $10 billion in revenue and there will be more painful cutbacks necessary, layoffs, plant closings etc.
One of the main problems is the economic difficulties of many of Corning's customers, Global Crossing and Williams communications have filed for Bankruptcy, Worldcom and Quest are in trouble, even venerable Verizon is cutting back. in this environment, it is virtually impossible to build a business model.
Fiber optics was 71% of revenues in past fiscal year.
On the bright side:
Flat panel display is running full bore, and the outlook is very bright.
Substrates (ceramic filters for catalytic converters, including new diesel products) looks to be a strong growing busines. The phase in of emission standards for diesel are largely based on GLW's ability to produce appropriate material.
GLW is #1 or #2 in all the businesses it competes in, and usually by a large margin. These business are strong and growing. telecom grew exuberantly and the fall off was not seen by anyone in the industry
GLW's plate is full, there are many products in the pipeline. The company remains committed to its core values - people, research and technology. the focus on technology remains criticall important
strong balance sheet - committment to stem losses and return to profitability in 2003
bandwith demand is growing 60-80% a year and this is forecast to continue. the glut is in the long-haul, but that is actually the smallest component of fibre - hub, metro and to the home being the largest components, and these sectors are healthier than long haul.
bottom line -
Mr Houghton's return as CEO was well received, and he is committed to sizing the company to the level of business, however gut wrenching painful that might be. it will not be done mercilessly, but will be done swiftly and with compassion. There are strong sectors. the telco -fiber optics remains a huge growth opportunity, it has hit a huge air pocket due to the exuberance of the past two years. Corning will continue to be a leader in it, and the other fields in participates in.
The company is being tested - but this is but one point in time. the company has been here before. it has the personnel and the products that will make it a great growing company again.
No Lady Godiva chocolates - last two years at the lunch that follows the annual meeting, there were served platters and lady godiva chocolates. this year there were sandwiches on a tray, coffee, and cookies. no lady godiva chocolates. no one seemed to mind. larry |
