Corning to Receive $250 Million Investment
Good news today for Corning (NYSE:GLW) as Apple (NASDAQ:AAPL) released a statement they are investing $250 million into the glass company. Yesterday Corning booked a nearly 9% drop in share price on news that it cut its outlook for the year on fears of a 3% to 5% sales decline compared to the previous guidance of a low-to-mid single digit increase. The investment is expected to be used in the development of an exclusive product stack for use in Apple devices such as those previously discussed here and will include, “state-of-the-art glass processes, equipment and materials integral to the delivery of next-generation consumer devices.” The money for this investment is going to come from the Advanced Manufacturing Fund that was created by Apple to promote additional developments of technology and jobs in the US market.
“Apple and Corning’s rich history dates back more than a decade, and our partnership revolutionized glass and transformed the technology industry with the first iPhone,” said Jeff Williams, Apple’s chief operating officer. “This award underscores Apple and Corning’s shared belief in the vital role that ingenuity plays in creating industry-leading products, and the pride that both companies take in applying American innovation and advanced manufacturing to solve some of the world’s toughest technology challenges.”
This investment in the glass maker is actually the second investment from Apple. It previously awarded Corning a $200 million dollar investment in May 2017 which brings the total amount awarded to $450 million dollars. Corning has a long history of providing glass screens to a variety of phone markers and is a lead developer of state-of-the-art glass technologies in general. The latest research going on includes research into flexible and bendable glass. This is an amazing technological development that turns on its head the idea most of us have when it comes to glass: hardness, shattering and cracking. The main part of the technology according to Corning is that, “If any material gets thin enough, it can become flexible, too.”
The market reaction to this development is still muted at this point with shares still down 7.7% and prices hovering around $27.76 per share. Analyst George Notter from Jefferies has also cut his price target for the firm to $27 from $29.5. Citigroup (NYSE:C) issued a statement that they will review their numbers in light of a decline in Corning’s display and fiber segments. Cross Research cut its recommendation to Hold from a previous Buy. The timing of the two events, Corning releasing its sales updates and Apple’s investment, looks to be limiting the current downside of the stock.