Apple Supplier Corning Stock Falls Even After Q3 Beat, Gen AI and Solar Growth in Focus

Shares of Apple’s glass supplier, Corning Inc. (NYSE:GLW), are trading lower premarket on Tuesday after the company reported third-quarter FY25 earnings results.

Earnings Details

The Corning, N.Y.-based company posted adjusted earnings of 67 cents per share, beating analyst estimates of 66 cents.

Core sales rose 14% year over year (Y/Y) to $4.27 billion, exceeding the $4.23 billion consensus.

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Core EPS grew 24% Y/Y, while core operating margin expanded 130 basis points Y/Y to 19.6%.

On a GAAP basis, Corning reported $4.1 billion in revenue (+21% Y/Y) and net income of $430 million, compared to a loss of $117 million in the same quarter last year.

The company said the difference between GAAP and core EPS primarily reflected mark-to-market adjustments on currency-related contracts and changes in constant currency.

Operating cash flow for the quarter was $784 million, and adjusted free cash flow stood at $535 million in the quarter.

Segments Performance

Optical Communications revenue rose 33% Y/Y to $1.65 billion, driven by a 58% Y/Y increase in enterprise sales. Strong adoption of Corning’s new Gen AI products aided the growth.

Meanwhile, Display sales fell 7% Y/Y to $939 million.

Specialty Materials revenue climbed 13% Y/Y to $621 million, while Automotive sales rose 6% Y/Y to $454 million in the quarter.

On the other hand, the Life Sciences segment declined 1% Y/Y to $242 million, and Hemlock and Emerging Growth Businesses' revenue increased 46% Y/Y to $364 million.

Management Commentary

CEO Wendell P. Weeks added, ” Overall, as we approach the second anniversary of Springboard, the plan has been a tremendous success. We have added $4 billion to our annualized sales run rate, and we have significantly improved our profitability – with an expected operating margin of 20% in the fourth quarter, a year ahead of plan.”

“Beyond our strong third-quarter performance, we see significant growth ahead, fueled by powerful secular trends. To share just a few examples, we are ramping to meet remarkable demand for both our new Gen AI and U.S.-made solar products, and Apple’s recent $2.5 billion commitment to produce 100% of iPhone and Apple Watch cover glass at our Kentucky facility creates a larger, longer-term opportunity.”

Outlook

The company continues to expect strong growth in the fourth quarter, led by ongoing robust demand for Gen AI products and solar wafer sales.

For the fourth quarter, Corning expects core sales of $4.35 billion, above the Street estimate of $4.254 billion, and adjusted EPS in the range of 68 to 72 cents, ahead of the 67-cent consensus.

Management anticipates continued strong performance under its Springboard plan, and targets an operating margin of 20% in the fourth quarter (up 370 basis points Y/Y), a year ahead of plan.

Price Action: GLW shares are trading 6% lower at $84.00 at last check on Tuesday.

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