Corning’s CEO remains confident about AI and broadband driving new optical opportunities

July 9, 2024
The company shared its forecast and plans to drive profitability in its optical business ahead of its earnings call.

Corning’s CEO Wendell Weeks is upbeat about the company’s prospects, telling investors in an announcement that it is setting the company on a path to profitability.

This week, the optical fiber company updated expectations for its second-quarter 2024 results.

The company expects core sales of approximately $3.6 billion, compared with previous guidance of approximately $3.4 billion, with core EPS at the high end of or slightly above management’s guided range of $0.42 to $0.46.

“We continue to execute on our plans to add more than $3 billion in annualized sales within the next three years,” he said in a prepared statement. “Importantly, the required capacity and capabilities to support this growth are in place and already reflected in our financials.”

Springboard Framework

What’s behind Corning’s growth plan is its Springboard Framework. Corning has forecast that the Springboard framework will add more than $3 billion in annualized sales over the next three years on favorable cyclical and secular trends.

This Framework is driven by cyclical factors and secular trends, combining four main areas: Optical Communications, Display, Automotive, and New Platforms.

In the Optical Communications segment, Corning noted that service provider customers are starting to purchase materials at current deployment rates this year. Beginning next year, a key focus will be the BEAD-related projects for network builds.

Earlier, it saw carrier revenue headwinds in the first quarter, reporting Optical Communications sales of $930 million, down 17% year over year. At that time, Weeks told investors he expected the business to pick up even though fiber shipments were over 30% below trend.

He said that Corning is righting the ship towards new growth patterns.

“We’re off to a great start with our ‘Springboard’ plan,” Weeks said. “We’ve positioned the company to capture significant growth with powerful incremental profit and cash flow. Because of our confidence in Springboard, we bought back our shares in the second quarter. The tremendous opportunity for value creation energizes us, and we’ve built for our shareholders.”

Eying AI, data center opportunities

In addition to new opportunities with traditional service providers, Corning is eager to capitalize on the budding Generative AI opportunity for its Optical Communications business.

The company forecasts that the Generative AI opportunity will drive “significant sales growth starting in 2024.”

To address the Generative AI opportunity, Corning has leveraged all three of its core technologies and three out of four manufacturing and engineering platforms to develop a new suite of products to address the challenges of density of compute power, complexity of GPU interconnections, and speed of installation for Generative AI.

Additionally, the company claims its products can offer 60% higher density. Perhaps even more compelling is that the products can be installed four times faster, needing less skilled labor.

Corning expects its enterprise business to grow at a CAGR of ~25% for several years.

The fiber company’s forecast comes as data center growth continues to rise.

A recent Synergy Research report revealed that the number of large data centers operated by hyperscale providers increased to 992 at the end of 2023 and passed the thousand mark in early 2024. Synergy forecasts that total hyperscale data center capacity will double again in the next four years. 

Corning will report second-quarter 2024 results and provide more detail on management’s outlook on July 30.

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About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.

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