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What’s Corning’s $20 Billion Capital Spending Plan?

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Corning’s $20 billion capital spending plan

In the last part of this series, we saw that Corning (GLW) reported weaker revenue due to economic headwinds. Among the short-term slowdown in revenue and profits, the company showed confidence in its long-term growth prospects. It announced a $20 billion capital spending program.

The company plans to spend about $10 billion by 2019 on share buybacks and dividends. It will repurchase $1.25 billion worth of shares in fiscal 4Q15. The company also plans to spend another $10 billion through 2019 on developing glass science, ceramic science, and optical physics technologies through capital investments, R&D (research and development), and M&A (mergers and acquisitions).

If the company considers any M&A, it will focus on its optical communications unit. It manufactures fiber optic cables and connectors. In March 2015, Corning completed the acquisition of Samsung Electronics’ (SSNLF) fiber optics unit to support the growth of its optical communications unit.

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Corning’s business units 

  • Display Technologies – The unit’s sales fell 11% YoY (year-over-year) to $936 million in fiscal 3Q15. For fiscal 4Q15, the company expects the glass volume and prices to continue to fall.
  • Optical Communications – The unit’s sales rose 7% YoY to $747 million in fiscal 3Q15. For fiscal 4Q15, the company expects a low to mid single-digit percentage YoY rise in sales.
  • Specialty Materials – The unit’s sales fell 12% YoY to $288 million in fiscal 3Q15. For fiscal 4Q15, the company expects a low-teens percentage YoY fall in sales.
  • Environmental Technologies – The unit’s sales fell 9% YoY to $257 million in fiscal 3Q15. The company expects a mid single-digit percentage YoY fall in sales in fiscal 4Q15.
  • Life Sciences – The unit’s sales fell 1% YoY to $211 million in fiscal 3Q15. The company’s guidance for this unit is same as its guidance for Environmental Technologies.
  • Dow Corning – The unit’s sales fell 22% YoY to $53 million in fiscal 3Q15. The company expects to report sales of about $80 million in fiscal 4Q15.

Recently, Dow Chemicals (DOW) hinted that it’s interested in acquiring Corning’s stake in Dow Corning. Corning is considering the offer. It’s in talks with Dow.

You can invest in Corning through the SPDR S&P 500 ETF (SPY). It has 0.12% exposure in the company’s stock. In the next part of the series, we’ll discuss Cypress’ (CY) performance in fiscal 3Q15.

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