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Strategies & Market Trends : Value Investing
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To: J Mako who wrote (44479)9/21/2011 9:56:40 PM
From: Spekulatius5 Recommendations  Read Replies (2) of 78476
 
re GLW - i know a bit about glass and I like Corning. They have a very strong market position in Display glass (Eagle XG and LCD glass) both from a market share and a technology point of view.

The tax differential of approx 20% between the US tax rate and the foreign taxes that GLW pays goes into deferred income taxes. If they can get around to pay those (because of a repatriation holiday or earnings just stay where they are generated) the book value would increase.

Corning is a "material" company so a lot of the know how is in how to make stuff, not how it works together (system know how) or in the software. That is why a material company like GLW always will incur a lot of capex and has to carry assets on their balance sheet, because they cannot outsource manufacturing, while most industrials know outsource quite a bit (the low tech stuff as they claim) and achieve higher ROA than a company like GLW.

GLW spends a lot on R&D (~9% of revenues) which is way more than most competitors. it seems to pay off since they do come up with new stuff like Gorilla glass or the specialty products in their life science divisions or new applications for ceramics. My sense is that a lot of GLW product go into one of the many high tech value chain and since high tech tends to recover first, GLW should shine again. With plenty of cash to fund operations and being the low cost leader in LCD glass (their biggest competitor is Nippon Electroglass and suffers from high yen prices) I am not worried about their future.
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