Corning Posts $4.8 Billion Loss, Charges

Corning Inc., the world's largest fiber-optic cable maker, said on Wednesday its second-quarter earnings fell due to the slowdown in the telecommunications industry. 

The Corning, New York-based company posted a net loss of $4.8 billion, or $5.13 a share, including a pretax charge of $4.8 billion for the impairment of goodwill and other intangible assets and an $8 million pretax restructuring charge. 

That compared with a net profit of $149 million, or 17 cents a share, in the same period last year. 

Second-quarter sales rose 5 percent, to $1.9 billion from $1.8 billion a year earlier. 

The company reported pro forma earnings, excluding the $4.8 billion pretax charge, of $80 million, or 9 cents a share. This compared with $271 million, or 31 cents a diluted share, in the same period a year ago. 

The second-quarter results included a pretax charge of $271 million ($184 million after tax), or 20 cents a share, to write off obsolete inventory in the photonic technologies unit. Adding that back in, the company's operating earnings were 29 cents a share, beating analysts' estimates. 

Analysts had expected Corning to earn 18 cents a share, with a range of 17 cents to 20 cents, according to market research firm Thomson Financial/First Call. 

``The telecommunications market outlook remains turbulent,'' Corning President and Chief Executive John Loose said in a statement. ``We continue to see a very significant decrease in the long-haul market in North America. The impact of this market decline has been most severe on our sales of LEAF fiber to new carriers and on our photonics business.'' 

He added that increased sales in China have helped offset the declines, but the photonics business will continue to be weak the rest of the year. 

Corning shares closed up 26 cents, or almost 2 percent, at $13.77 in Wednesday trading on the New York Stock Exchange before the results were announced. Over the past year, they have underperformed the S&P 500 and S&P Communications Equipment indexes by about 81 percent and 19 percent, respectively. 

A TOUGH SECTOR 

The slowdown in customer spending has hurt a lot of former high-tech powerhouses, including Nortel Networks Corp., Cisco Systems Inc. and JDS Uniphase Corp., all of which have cut financial forecasts and jobs. 

Earlier this month, Corning said it would cut another 1,000 jobs, close three plants, and take the $5.1 billion in charges. The company also said the slowdown could last another 12 to 18 months. It said then the second-quarter results, excluding the one-time items, would beat estimates but added the second half of the year would lag expectations. 

The company also killed its dividend payment, something it had paid every year since it first became a publicly held firm in 1945.