Corning Watch: Glass glut good for holiday shoppers, bad for Corning

Last week I looked at one tech analyst's concern that evolving technology could eventually slow the growth of Corning Inc.'s sales of flat-panel glass for liquid crystal display televisions.

This week, however, there are rumblings that a slowdown could come sooner -- perhaps within weeks or months.

The respected market research company iSuppli says television sales are softening at the same time manufacturers are building excessive inventory levels of unfinished TV panels.

Sweta Dash, iSuppli's senior director for LCD research, said concern is rising because the inventory increases come "amid fears of a slowing economy and the possibility of a double-dip recession."

In the first quarter of this year, shipments of TV panels exceeded shipments of finished LCD TVs by 24.5 percent. By the second quarter, the gap had grown to 36.4 percent.

These developments have two implications for the Twin Tiers' largest employer, which depends on flat-panel glass sales for most of its profits.

First, an inventory buildup will cause panel manufacturers to cut back sharply on production and on orders of flat-panel glass. Second, it will force down retail prices of TVs and put downward pressure on glass prices.

iSuppli said panel prices slipped 4.4 percent in August and are expected to drop again in September. Panel buyers also cut orders in both July and August.

All that could work to the advantage of the consumer who is considering buying a large flat-screen television this fall. If the inventory glut persists, holiday season price wars could be in the offing.

In an effort to avoid those price wars -- which wreak havoc with profits -- some panel makers and television manufacturers have already begun cutting production targets and inventory levels.

The question is whether they can clear the inventory glut before serious holiday shopping begins. If not, prices could sink like a rock.

There's no good news for Corning Inc. in any of this, especially if the economy continues its erratic performance and TV panel inventories remain high.

Until these factors are resolved, the Fortune 500 company faces the prospect of selling less glass at lower prices, a development that Wall Street will find hard to ignore.