The pain being felt in the short term in the telecommunications and technology markets will give way to long-term growth for Corning's (Quote), the company's president and chief executive officer (CEO) is set to reveal today.
At its annual investor conference in New York City, Corning CEO John W. Loose will say, "recognizing the many uncertainties about the broader economy, we are carefully walking the line between realism and optimism. We believe that the first quarter of this year will represent a bottoming out across our businesses as revenues are expected to approximate those of the fourth quarter last year."
"Although it appears that our revenue stream will improve as the year plays out, the pace and timing of recovery is uncertain," he will also say.
Loose will also reveal that in 2002 Corning will invest approximately $550 million in research, development and engineering projects in such areas as optical transparency in telecommunications networks, ceramic substrates and particulate filter technologies for diesel engines and ultra-thin substrates for a new generation of flat screen liquid crystal displays (LCD). The company expects capital spending for 2002 to be approximately $500 million.
On the optical side, Wendell P. Weeks, president of Corning Optical Communications, will tell investors that, "we think we are at bottom, but we continue to be unsure when the recovery actually will begin." He also will point out, that when the recovery begins, the growth will be led by optical fiber build outs in the metro and access markets and by the lighting of previously installed long-haul fibers which will require additional photonic modules. Corning expects fiber shipments to increase at least 15% in the first quarter of 2002 over the fourth quarter of last year.
Corning Optical Communications includes the company's optical fiber and cable, photonic technologies and optical networking devices businesses.
"We believe the fundamental drivers of our optical layer strategy remain intact," Weeks will say. "Bandwidth demand will remain robust, with compound growth in the 60% to 80% range for the foreseeable future. As more and more network functions are moving to the optical domain, it is apparent to us that optical remains a transcendent technology."
The company also provided financial guidance for the first quarter of 2002. Corning said it expects revenues in the range of $925 million to $950 million and a net loss in the range of $0.14 per share to $0.18 per share. A consensus of 21 analysts surveyed by Thomson Financial/First Call put Corning's first quarter loss at $0.17 a share, and in a range from $0.13 to $0.28.
James B. Flaws, Corning's chief financial officer, will say Corning ended 2001 with $2.2 billion in cash and continues to have an unused and committed $2 billion revolving credit line available. Also, the company expects to be free cash flow positive late in the year but will have negative free cash flow for the total year. "The company's cash and liquidity resources are ample to cover ongoing business requirements," Flaws will say.
Corning made its executives' remarks public today in an early morning press release.
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