Corning reported optical sales rose 6 percent in the third quarter, likely the fruits of service providers’ Fiber to the Home rollouts and overcoming a back office issue pay off – but hyperscale data center market results missed its expectations.
Within the Optical unit, Corning saw gains across both of its segments – carrier and enterprise – ending the quarter with total operating sales of $795 million.
Carrier sales rose 7 percent year-over-year to $594 million, while Enterprise sales rose 3 percent to $201 million.
Tony Tripeny, SVP and CFO, told investors during its third quarter earnings call the Optical unit’s sales were due to strong FTTH growth.
“Overall, we are pleased with the growth in Optical Communications in the third quarter and expect strong growth again in Q4,” Tripeny said.
However compelling growth in the FTTH segment was, the vendor reported that hyper-scale data center sales were below expectations due to project timing.
“While our growth in Optical Communications was strong on an absolute basis, we missed our own guidance because growth in hyper-scale data center projects was below expectations,” Tripeny said. “Our sales for our large hyper-scale data center range from $5 million-$10 million, so delay of a single project can reduce total segment growth by more than 1 percentage point.
Tripeny added that despite the softer third quarter, “We remain well positioned to capture secular long-term growth in the hyper-scale segment.”
Besides FTTH and data centers, Corning is also seeing growing opportunities to serve as an underlying platform for stadium wireless deployments.
In August, the Atlanta Falcons CTO announced that Atlanta's new Mercedes-Benz Stadium will use the Corning ONE platform as a single optical network core that integrates Wi-Fi, cellular and video. Working alongside lead integrator IBM, Corning will be providing 4,000 miles of optical cable and 1,400 Wi-Fi access points.
“Now, what gets me excited about wins like this is not the size, which is certainly impressive, but instead, it's that the skill sets underlying the Corning ONE platform are directly applicable to the emerging opportunities in 5G wireless,” said Wendell Weeks, CEO of Corning.
From an overall financial perspective, Corning reported $2.5 billion in core sales, up 4 percent year-over-year.
Looking toward the fourth quarter, Tripeny said Corning expects sales to be up high-single digits year-over-year, driven by strength in FTTH.
Corning still expects continued slowness in the hyperscale data center segment.
“For the fourth quarter, we expect sales to grow in the high single digits year-over-year, led by continued fiber-to-the-home strength,” Tripeny said. “We expect hyper-scale sales to continue growing faster than overall Optical Communications segment, but at a rate lower than we anticipated earlier in the year.”