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Technology Stocks : Corning Incorporated (GLW) -- Ignore unavailable to you. Want to Upgrade?

To: Ibexx who wrote (1375)	6/21/2001 11:43:20 PM
From: tech101	Read Replies (1) \| Respond to of 2260

If the recovery were in sight ... Of course, if the recovery were in sight, the stocks would be pricier. So the time to buy is now, when these stocks are beaten to a pulp. That's thinking like a true contrarian. So we turn our focus to two battered telecom-related companies — tech conglomerate Corning (NYSE:GLW - news) and construction-services provider Dycom Industries (NYSE:DY - news). There's no question both companies will continue to face difficult times in the coming months. But the stocks may have already taken that into consideration. Corning Back in September, Corning hit a 52-week high of $113.29, thanks to its surging sales of the glass fibers used to build fiber-optic broadband capacity. Recently, the company touched a new 52-week low of $12.60, thanks to its languishing sales of that fiber. Truth be told, the company has remained eerily silent about its revenues in these last few weeks of its June quarter. And that silence is making investors very nervous. ``In this market environment, investors tend to assume the worst,'' says Drake Johnstone of Davenport & Co., who follows Corning and its peers. It doesn't help that Nortel and Level 3 — both customers of Corning's — have already admitted their short-term prospects stink. And naturally enough, analysts haven't waited for guidance to slash their Corning estimates. Current estimates are looking for 86 cents a share in earnings this fiscal year, and that's below the low end of the company's previous guidance to Wall Street. So what makes us think this stock has any potential for recovery? Well, a couple of things. First of all, Corning is fairly well diversified. Sure, telecom-related revenues accounted for 72% of its $7.1 billion in sales last year. But the company does have other businesses cooking on the side. Once famous for its Corningware and Pyrex brands, Corning currently makes flat-panel displays for televisions and computers. It also manufactures specialty materials and equipment for the scientific, semiconductor and environmental research markets. More diversification translates into less earnings risk than at many of Corning's telecom-equipment peers. Seventy-two percent is still a big number when it represents exposure to a market in the dumps. But take a look at Corning's valuation — it already reflects much of the bad news. At around $13, the stock trades for 15 times Wall Street's recently reduced current-year earnings estimate of 86 cents a share. That's well below the S&P 500's current multiple of 23 times this year's earnings. Moreover, Corning trades for just 10 times its earnings from continuing operations over the past 12 months — a 76% discount to its five-year average of 41. To look at it another way, the stock trades for 1.6 times revenues, which is safely in value-stock territory. But Corning is really only a value if it can recover its lost telecom-related sales. On that issue, the Street is cautious about the coming months, but generally positive about the long term. After all, analysts expect Corning's earnings to grow an average of 25% a year over the next three to five years. Fiber-optic-cable sales are expected to pick up, as overseas and metropolitan markets get wired. Right now, Corning is working with three major telecom carriers in China to lay fiber-optic cable across the country. So far this year, the stock has been downgraded 17 times, according to Briefing.com. Just last week alone, Merrill Lynch was one of five brokerages to lower their ratings. But note that Merrill continues to recommend the company to long-term investors ``based on Corning's leading position in excellent long-term growth areas.'' Given the short-term storm clouds, Davenport analyst Johnstone wouldn't be surprised if Corning issued a new warning about June-quarter expectations any day now. And that might hammer the stock anew. But he also thinks a warning might be a catalyst for the stock. ``It would be a relief,'' he suggests, ``and provide some support for the stock.'' Waiting for analysts to jump back on the Corning ship would mean waiting for a higher price. ... By: SmartMoney.com - Stock Screen Go Ahead, Hit Me Again By Cintra Scott biz.yahoo.com