After sales increased 16% in Q3, Corning issues a Q4 optical downturn warning
Corning’s overall revenue fell 4% year on year to $3.5 billion as the boost from Optical failed to offset declines in its Display and Specialty Materials units.
The majority of Corning‘s third-quarter revenues came from its Optical Communications division, whose unit revenue increased 16% year over year to $1.3 billion. However, according to CEO Wendell Weeks, this increase isn’t anticipated to last into the fourth quarter. In its place, the business foresaw a sequential drop in optical revenue in the coming quarter.
Weeks and CFO Ed Schlesinger claimed that the anticipated Q4 slump was typical of the optical business and can fluctuate from quarter to quarter. They emphasized that it is not a reflection of the general state of demand, but rather the timing of projects from a select group of significant North American telecom clients.
“Macro demand in Opto is incredibly strong,” Weeks said. “The nature of telecommunications is that it’s a pretty concentrated industry. So, all that tends to happen is that when some of our bigger customers end up changing their timing or altering their timing, that’s what leads to the lumpiness of our revenue.”
The company announced it is imposing yet another round of price hikes for optical products in order to pass on to customers increased energy and raw material prices. It also increased prices earlier this year, noting the action on its Q1 earnings call.
Weeks reported that so far there has been no opposition to the most recent price hikes. The company’s “More Corning” strategy, he pointed out, saves operators money on materials and reduces the time required for deployment. It specifically promotes this angle to cloud-based companies, promising “fully engineered connectivity technologies” that can save installation timelines by months, the source continued.
Corning’s overall revenue decreased 4% year over year to $3.5 billion as decreases in its Display and Specialty Materials segments were unable to be compensated by an increase from Optical. A $208 million net loss was a 44% decrease over the prior year.
The business stated that it anticipates “core” sales in Q4 of $3.45 to $3.65 billion. The revenue would have decreased from $3.68 billion in Q4 2021 to that amount.