Corning is prepared for a prolonged recession, "but well positioned in key growth markets to take advantage of opportunities when the economy turns," Wendell P. Weeks, chairman and chief executive officer, said at the company's annual investor conference in New York. The company has already taken a number of steps to lower its costs, including eliminating temporary and contract worker positions, extending manufacturing shutdowns, adopting a zero-based capital budget for 2009, cutting 3,500 full-time positions, suspending salaried merit increases, and consolidating some manufacturing operations.
However, Corning still plans to spend about $630 million on research, development, and engineering in 2009. The company cited progress with its Gorilla glass for portable display devices and its extension into the notebook computer and desk-top monitor space; advances with its Epic System and cell culture solutions; establishment of manufacturing processes for green lasers for microprojection in anticipation of 2009 sales; advances in mercury abatement for coal-fired power plants; and delivery of customer samples of thin-film photovoltaics for solar-powered energy solutions.
Corning said that although the 2008 telecom market was below expectations and the 2009 market is shaping up to be even weaker, telecom macro trends remain strong and the historic technology shift from copper to optical will continue. "Optical fiber is winning," said Clark S. Kinlin, president and chief executive officer of Corning Cable Systems. "The substitution of fiber over copper lines continues as bandwidth requirements in individual homes grow. Our ClearCurve product portfolio provides solutions for delivering high-speed bandwidth into the most challenging locations such as high-rise apartments and, soon, tight-fitting data center applications. These revolutionary technologies allow us to expand our leadership in the growing fiber to the home and enterprise network markets."
Here are some additional highlights from the telecom portion of the company's presentation:
2008 Recap --Telecom Market
- Optical Fiber & Cable -- there was strong worldwide volume growth of 12-15%
- Access network construction drove strong 1H
- The Global recession impacted 2H growth rate
- Fiber-to-the-Home (FTTH) saw strong growth of ~15% while DSL declined by ~25%
- Private (Enterprise) Networks saw slight growth: ~3%
- There was lower commercial construction offset by data center growth
For 2009, Corning is forecasting
- The telecom market to be down 10-15% vs. 2008
- Public Carrier Networks to be down ~10%
- Private (Enterprise) Networks to be down by ~20%
