Corning Expects 2001 Profit to Miss Forecasts

Corning Inc., the world’s biggest maker of fiber-optic cable, said Monday that it expects profit for 2001 to miss estimates and suggested more layoffs could be on the way because of slower customer spending.

Investors, accustomed to profit warnings from telecommunications equipment makers and other technology companies as the U.S. economy slows, shrugged off the warning and sent the stock higher.

The company said it is imposing stronger cost controls and considering more layoffs in addition to the 825 workers it trimmed at the beginning of March. Corning employs about 40,000 people.

Fiber-optic cable is the backbone of telecommunications and the Internet. Corning, based in Corning, N.Y., and other optical equipment shares have been pummeled this year as telecommunications companies have trimmed spending.

As recently as last week, Corning Chief Executive John W. Loose had reaffirmed the company’s 2001 profit projections of $1.40 to $1.43 a share.

“Our new outlook is based on recent customer feedback, which indicates that a meaningful recovery of spending by our telecommunications customers will occur much more slowly than we had previously anticipated,” Loose said.

Corning said it expects pro forma earnings of $1.20 to $1.30 a share for the year.

It estimated revenue at $8.2 billion to $8.5 billion for the year, up 15% to 20% from $7.1 billion in 2000. It had earlier forecast sales of $9.1 billion.

Revenue from photonic technologies probably will grow 20% to 25%, rather than 50% as previously forecast, Corning said.

The company said its main photonics customers are working through inventories. Corning does not expect that market to improve until well into the second half of 2001.

The company maintained its outlook for first-quarter profit at 28 cents to 31 cents a share. Analysts expect 29 cents a share for its first quarter and $1.36 for the full year, according First Call/Thomson Financial.

The company’s shares rose $2.02 to close at $25.20 on the New York Stock Exchange. They are down from a 12-month high of $113.29 and near a 12-month low of $23.

Analyst Larry Harris of Josephthal & Co. said the Corning warning had been expected because of weakening profit at such fiber-optic parts makers as Canada’s JDS Uniphase Corp.

Corning said it projected worldwide fiber market growth of 20% this year. It added that its own growth in fiber volume would be in line with market expectations.