Corning said on Wednesday it would partially reopen an optical fibre manufacturing plant it had mothballed five years ago, amid signs of the most significant revival in demand for the material since the telecommunications bubble burst seven years ago.
The planned reopening of the North Carolina facility marks the gradual recovery of a market that turned the US high-tech glass company into one of the hottest stocks at the tail end of the tech bubble, only to see its fortunes crash as the telecoms sector retreated in the face of overcapacity in long-distance fibre-optic networks. Besides mothballing one of its six factories, Corning closed three others for good as it struggled to stay afloat.
The fibre market has grown 15 per cent in volume terms in each of the past two years, Corning said, with most of the new demand coming from local access and city-wide networks. This reflects a push by cable and telecoms companies to boost broadband capacity by bringing fibre closer to their customers’ premises.
Optical fibre sales were an unexpected bright spot in Corning’s first-quarter earnings on Wednesday, contributing to revenues above forecast and a 5 per cent jump in the company’s shares in early trading. That balanced out a weaker quarter in the company’s new core business of manufacturing glass for
liquid crystal displays.
Sales from Corning’s telecoms division rose 11 per cent in the quarter to $439m.
LCD sales fell to $524m, a fall of 4 per cent from a year before, when Corning was boosted by an unusually rapid build-up in inventory by makers of LCD displays. The company’s overall sales of $1.31bn topped forecasts of $1.29bn, while pro-forma earnings per share, the basis on which Wall Street judges the company, were 2 cents ahead of estimate.