Apple supplier Corning Q3 revenue forecast hit by consumer electronics slump

(Reuters) – Specialty glass maker Corning forecast third-quarter core sales below Wall Street estimates on Tuesday, as it grapples with the ongoing slump in the consumer electronics market.

Corning said it expects core sales of about $3.5 billion in the three months ending September, compared with analysts’ estimates of $3.70 billion, according to data from Refinitiv.

Shares of Corning, whose Gorilla glass for smartphones is used by companies such as Apple and Samsung Electronics, were down nearly 1.5% before the bell.

The company has seen a drop in demand from its consumer electronics clients as smartphone makers try to clear a build-up of inventory caused by high inflation and rising interest rates.

Corning has moved aggressively this year to cut down on costs to make up for the slump in its main markets, which, combined with earlier price hikes, has helped the company to still expand its core gross margin by 100 basis points to 36.2%.

“We expect to continue improving profitability and cash flow despite our relatively muted sales environment,” said CEO Wendell Weeks.

In the second quarter, core sales fell 7.4% year-on-year to $3.48 billion, in line with estimates, according to Refinitiv, but have risen 3% from the previous quarter in a likely sign the slump in client spending may be starting to ease.

Revenue from the optical communications unit – Corning’s biggest – fell 19% from a year earlier, hit by weak demand for its optical fiber cables used in telecommunications business.

The specialty materials business, home to Gorilla Glass, posted a 13% fall in revenue, but that was somewhat cushioned by a jump in sales at the display technologies unit.

Corning posted an adjusted profit of 45 cents per share, just short of the 46 cents estimated by analysts.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)