Corning Inc. to cut 3,500 jobs globally as profit falls

CORNING - Corning Inc. (NYSE: GLW) announced Jan. 27 plans to cut 3,500 employees, or 13 percent of its global work force, by the end of the year, as demand for glass used in flat-screen televisions continues declining.

The reduction includes about 1,500 salaried employees.

The company earned $249 million in the fourth quarter, or 16 cents per share, a 65 percent decrease over its $717 million profit, or 45 cents per share during the same time period in 2007.

Analysts had expected earnings of 20 cents a share, according to Yahoo Finance.

Corning experienced a significant momentum shift in many of its core businesses in the fourth quarter as the recession took hold, said Wendell Weeks, chairman and CEO, in a news release.

"As a result, we are adjusting our operations to reflect anticipated lower sales in 2009. We are also moving aggressively to reduce operating expenses and capital spending to continue to meet our goals of positive free cash flow and a healthy balance sheet," he said.

The specialty glass and ceramics maker said its sales fell 31 percent in the fourth quarter to $1.08 billion, compared to $1.58 billion generated during the fourth quarter of 2007.

Sales of glass for liquid crystal display (LCD) televisions generated $390 million in the fourth quarter, a 50 percent decline over the previous year's quarter.

Corning's total fourth-quarter sales figure fell below analysts' expectation of $1.16 billion, according to Yahoo Finance.

The company previously announced Nov. 18 that sales for the fourth quarter and 2009 would be lower than expected because of falling demand for glass used in LCDs.

Besides the job cuts, Corning's restructuring plan also includes an early retirement program, consolidated manufacturing facilities, and suspension of merit increases for salaried employees.

The planned companywide restructuring will result in first-quarter charges between $115 million and $165 million pre-tax, in addition to the fourth-quarter restructuring charges of $22 million.

Corning expects restructuring to result in annual savings of $150 million to $200 million.

Corning anticipates a slow start to 2009 with first quarter combined display volume down 20 percent to 25 percent, as suppliers continue reducing inventory during the seasonally weaker retail sales quarter, said James Flaws, vice chairman and chief financial officer.

"As we announced last December, we will also have high-single-digit price declines in the first quarter. As a result, sales, gross margin and net income will be sequentially lower," he said.

Flaws expects earnings per share, before special items, to be about break-even in the first quarter.

Corning's immediate priorities include preserving cash and restructuring the company for profitability at a lower sales level, Flaws said.