Corning's Q2 optical sales jump 28% as firm sees ongoing demand for FTTH, data center solutions


Corning reported that its Optical Communications unit was a star player in the second quarter results as sales rose 28 percent sequentially, to $782 million, due to strong demand and cable production recovery.

After suffering through a software issue that impacted cable production, Corning said it returned to full capacity toward the end of the second quarter. Service provider demand for FTTH and data center solutions drove higher sequential volume in the second quarter.

Tony Tripeny, senior vice president and CFO for Corning, said solving its software issue related to fiber manufacturing and ongoing demand led to higher Optical Communications sales.

"Results snapped back from the first quarter due to strong demand and the return to full production at our cabling facilities towards the end of the quarter," Tripeny said.

While the vendor has righted the Optical Communications issues it had, the software issue took its toll on second quarter segment earnings, which declined 2 percent year-over-year.

Looking toward the third quarter, Corning said it expects Optical Communications demand to remain strong and sales to grow approximately 10 percent on a year-over-year basis.

Corning bolstered the Optical Communications business' fortunes in FTTH and the data center segments by purchasing Alliance Fiber Optic Products (AFOP) in June. What AFOP brings to the table is its expertise in designing high-performance passive optical components.

Trefis Solutions said in a Forbes report that this acquisition could bolster the Optical Communications unit.

"Corning also completed the acquisition of Alliance Fiber Optic Products in Q2 2016 in order to expand their market access and enhance product sets in fiber-to-the-home and data center portfolios," the Trefis team wrote. "We believe that these acquisitions will lead to better performance of Corning's automotive and fiber optic segments in Q2 2016."

Overall total second quarter sales were $2.36 billion, up 1 percent from $2.34 billion in the same period a year ago. Tripeny said during the second quarter earnings call that Optical Communications growth drove overall sales growth.

"Sales in the second quarter were $2.4 billion, up sequentially from $2.2 billion in the first quarter and exceeding our expectations driven by Optical Communications," Tripeny said.

Looking toward the third quarter, Corning said it expects sales and earnings per share (EPS) to grow both sequentially and on year-over-year basis.

For more:
- listen to the earnings webcast (reg. req.)
- see the earnings release
Forbes has this article

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