COMPANY PROFILE -Corning
Business Sector :Glass, Ceramics, Optical Fibres (Material Science)
Operating Geography :United States, North America, Global
About Corning :Corning Inc is an American multinational company headquartered in New York. Established in 1851, the manufacturing company has been the world’s leading innovator in material science has an unparalleled expertise in Specialty Glass, Ceramics and Optical Physics. With approximately 45000 employees worldwide, Corning Inc. ranks 298 among the Fortune 500 Companies.
Corning Revenue :$9.7 billion (2016)
Competitive Analysis of Corning
|1. Strong Innovation |
2. Strong Strategic and Capital allocation framework
3. Increase in Core Earnings Per Share by 11% from 2015
4. Strong Acquisitions and collaborations
|1. Decrease in Net Sales and Net Income Year-over-year
2. Dependence on Market status for Derived demand
|1. Creating opportunities through Innovation programs like the Glass Age, Inspired by Glass|
2. Emerging Market for Optical Communication
|1. Market saturation of Display Technologies
2. Declining Business in Environmental Technologies Segment due to weakening of Diesel Product Market
3. Several competitors across all of Corning’s Product line
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Detailed SWOT Analysis of Corning
1. Strong Innovation: Corning has a culture as well as history of Innovations for more than 165 years developing products to transform human lives. Corning continues to be the innovation leader in Glass, Ceramic and Optical communication products through sustained investments in R&D. Innovation provides competitive advantage to Corning over its competitors. Celebrating a decade of inventing Corning Gorilla Glass series, its present Innovation products includes Corning Willow Glass (glass that bends), Fibrance (Light diffusing fibre), OLED Lighting, Advanced Flow Reactors and many more including Corning Glass for Interior Architecture.
2. Strong Strategic and Capital Allocation Framework: Corning has adopted the four year strategy of leveraging its strong financial and operational strengths into Strategic and Capital allocation framework with an aim to focus on its portfolio (invest $10 billion in its Corning portfolio, return cash of $12.5 Billion to its shareholders through share repurchase and increased dividends thus creating significant value. An update to the capital allocation framework that happened in June 2016 is the Dow Corning Realignment which includes having 40.25% ownership in Hemlock Semiconductor Group having a potential for growth in solar market, complementary products and market access opportunities, continued relationships with leading chemical players, increased market visibility and access for semiconductor innovation programs. The Dow Corning Realignment is a milestone to its 80% portfolio focus and also adds more value to shareholder for it allows tax free transactions.
3. Increase in Core EPS by 11% from 2015: As a part of Corning’s strategy to create value for investors/shareholders, the core EPS had increased by 11% driven by share repurchase drives. While the Revenue and Income has reduced due to market fluctuations along with operation alignment with the acquired companies, Corning looks forward to improvement in the financial segment as the year progresses.
4. Strong Acquisitions and Collaborations: The Acquisitions and Collaborations are a part of the Framework in terms of Strategic Transactions which is expected to advance Corning’s growth. Corning has acquired Stran Technologies and Alliance Fibre Optic Products in the year 2016. It has also acquired SpiderCloud Wireless Inc in 2017. Corning has also announced a joint venture with Saint-Gobain Sekurit to enter the new segment to automotive glazing solutions. The strategic re-alignment with Dow Corning also sets a milestone to 80% portfolio focus strategy.
1. Decrease in Net Sales and Net Income Year-over-year: The core sales in 2016 is $9.71 billion, reduced 1% from that of $9.8 billion in 2015 which has decreased by 1.5% from $9.95 billion in 2014. Similarly, the core net income in 2016 climbed down by 6% to $1.77 from $1.88 billion in 2015 which came down by 6% from $2.02 billion in 2014. This suggests a decline in market along with other external factors indirectly causing less sales. However, the profit margins and revenues are better than that of its competitors.
2. Dependence on Market status for Derived demand: Corning’s product line is more like spare parts which needs to be assembled with some other product for some specific feature. Thus Corning’s product demand is derived from the demand of the products in needs to be used in. Thus decrease in demand for diesel products have resulted in decreased sales of Environmental Technology products. Similarly the demand for new Corning products will also depend on the demand of the high tech products which will incorporate them.
1. Creating Opportunities through Innovation Programmes: Corning has introduced the Glass Age at Consumer Electrics Show (CES) in 2017. With its “Inspired by Glass” series, Corning has created a huge opportunity by showcasing its innovation and possibility of a better and technologically advanced future. Corning has also teamed up with Merck & Pfizer to create a new glass in medical products. Corning’s low-flow reactors and OLED also seems to have promising future.
2. Emerging Market for Optical Communication: As per Press Release by the Market and Markets Pvt Ltd. the Optical Networking and Communications Market will worth $25.97 billion by 2020. Corning’s expertise in Optical physics growth in the revenues year-over-year in Optical communication segment certainly signals positive in terms of huge opportunity. Verizon has recently collaborated with Corning for a 3-year Minimum Purchase Agreement for Next Generation Optical Solutions.
The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.
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Corning SWOT and PESTLE analysis has been conducted by Bishnupriya Bala and reviewed by senior analysts from Barakaat Consulting.