If you're a
Corning (NYSE: GLW) shareholder, and feeling
a bit of neck pain this morning, then that's only to be
expected. Recent good news at the company, followed by the
sudden emergence of "bad news" yesterday, followed by the
near-4% surge in stock price at Corning, could give anyone a
nasty case of whiplash.
When
Best Buy (NYSE: BBY)
highlighted its strongLCD TV sales last month, fellow
Fool Mike Pienciak called this "good news" for the LCD glass
manufacturer. When
Target (NYSE: TGT) said LCDs were one of
itssales drivers as well, the bull thesis for
Corning got even brighter. Along with
Wal-Mart (NYSE: WMT) and
Sears (Nasdaq: SHLD), these companies make up
the four horsemen of the Big-Boxocalypse in American
electronics retailing. It only makes sense that good news for
the retailers would be good news for LCD upstream player
Corning.
But what does it mean when we learn that somewhere
"midstream" in the LCD glass-to-panel-to-set-to-finished
product continuum, things are looking more turbulent?
People who live in LCD glass houses shouldn't stow
... panels
Yesterday we learned that
LG Display (NYSE: LPL) -- one of the biggest
players in LCD TV-Land -- sees inventories of LCD panels
surging toward year-end, and extending into early next year.
The observation comes as an especial surprise in light of LG
Display's
otherannouncement yesterday -- that it plans to sink
as much as $4 billion into a joint venture to build a panel
plant in Guangzhou, China.
Why, one might ask, would LG Display decide to expand
capacity in the face of a looming supply glut? It doesn't
make sense -- until you consider the context:
a market far from saturated. LG Display seems to think
this trend has legs, and considering that it will take "at
least two to three years" to complete the Guangzhou plant,
the impact on near-term panel supplies should be, well --
nonexistant.
Foolish takeaway
Short-term, LG Display's comments don't sound
particularly encouraging for Corning. Longer term, however,
both LG Display's words
andits actions in China suggest that LCD glass
demand is only going to rise. And that, friends, is great
news for Corning.
This article was originally published as
Can Corning Cut It?on
Fool.com
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