Specialty glasses producer Corning (NYSE:GLW) has had a sketchy year so far. Its shares are up just under 8% and it is exchanging close to its 52-week high. So, investors must be supposing whether Corning is still worth holding or is it a sell, especially as it comes under rivalry from the likes of GT Advanced Technologies (GTAT) for its Apple (NASDAQ:AAPL) account? We should discover.
Weakness Creeps In
Corning's management is truly satisfied with the organization's execution, as its numbers in the late final quarter were dependent upon expectations. Corning's sales were determined by record sales in display and appeal for LCD glasses because of an increase in retail interest for bigger televisions. Then again, going ahead, management expects that there will be considerable decrease in LCD prices.
It was by virtue of lower volumes sold for gorilla glass. This was a grieved nerve for the glass creator as the year progressed, and the same is relied upon to proceed later on as adversary GT Advanced Technologies brings sapphire crystal display to the business and hurts Corning's business.
- Warning! GuruFocus has detected 5 Warning Signs with GLW. Click here to check it out.
- GLW 15-Year Financial Data
- The intrinsic value of GLW
- Peter Lynch Chart of GLW
A Big, Big Threat
In spite of the fact that it hasn't been affirmed that Apple's new iphone 6 will accompany a sapphire display, numerous rumored sources like Forbes and Canaccord are sure that the following version of the iphone will posses a sapphire display. Apple dumping the Gorilla Glass for sapphire crystal display might be a disaster for Corning and the organization is plainly nervous about it. Tony Tripney, a senior VP at Corning, as of late dispatched a blistering assault on the prospects of a sapphire made display. He boasted Gorilla Glass as the best and made the accompanying claims as to why it is superior to sapphire.
· Sapphire is about 10 times more expensive than Gorilla Glass slates.
· Sapphire is about 1.6 times heavier than Gorilla Glass.
· Sapphire transmits less light than Gorilla Glass.
· Sapphire is so difficult that assembling fitting screens out of it requires pricey machines.
· Gorilla Glass can take 2.5 times as much pressure as a sapphire screen before breaking.
· Sapphire display will shatter easily as contrasted with Gorilla Glass.
This obviously confirms that Corning is truly stressed over losing Apple, especially when you consider the way that most of these statements are ambiguous. Corning's last-dumped endeavor to persuade Apple had desperation composed on top of it as most of these claims could be demonstrated offbase.
Busting The Myths
Tripney is basing his contention on the way that phones will just have sapphire as the sole defensive glass; in any case, that is not the situation. The fact of the matter is that the iphone 6 display won't be simply sapphire as Apple has effectively licensed a strategy which involves fusing a flimsy sapphire overlay sheet with spread glass. This is the place GT Advanced Technologies, Apple's sapphire accomplice, comes into play. GT Advanced Technologies procured Twin Creek amid the end of 2012 and it created a process called particle gun innovation which is equipped for delivering sheets of sapphire more slender than human hair. This means that Apple won't need to produce immaculate sapphire displays for the iphone 6, and this naturally disproves point 1, 2 and 3.
Moreover, the estimated cost for an iphone sized sapphire screen lies in the scope of $9 to $12, which isn't "10 times" more expensive than a similar Gorilla Glass which costs a bit less than $3.
Proceeding onward, because of Apple's economies of scale, assembling sapphire won't be as expensive. This again negates point 1 and point 4 as well. With the increase in creation and progression in technologies, the cost will descend further later on. In addition, since Apple has an exceptionally steadfast fan base, it can easily increase the cost of the iphone 6 by a couple of dollars to make up for the increased cost without having a negative effect on the sales.
The last two points comes down to personal preferences. Individuals who are cautious and infrequently drop their phones will incline toward sapphire display because of its scratch-resistant abilities, while individuals who drop their phones will favor Gorilla Glass. Further, scratches debilitate the telephone's screen and a scratched screen is more inclined to breaking, which sort of goes against Tripney's last 2 points as well.
I believe its a decent thought to sell Corning. The stock has conveyed a solid return of close to half throughout the last year to investors, yet I believe that the appearance of new technologies will prompt weakness in its business later on, making it a sell candidate.