Pros Mixed On Corning’s Gorilla Glass 2 Outlook
Corning CEO Wendell Weeks showed off the company’s new, thinner Gorilla Glass 2 on Tuesday, but the “Fast Money” experts weren’t unanimously swayed on the stock’s prospects for 2012.
“We’ve reinvented the product so you can be 20 percent thinner with the same legendary strength,” Weeks said in a demonstration of Gorilla Glass 2.
Maker of high-strength touch screens for smartphones, tablets, TVs and PCs, Corning introduced its new product at 2012 International CES.
While Weeks said he expected the new material to perform well, he gave no specific sales figures.
Trader Joe Terranova wasn’t bowled over.
“There’s slowing end demand, there’s overcapacity, and that means there will be further price cuts in 2012. It’s one of the reasons why at the end of November they came out and preannounced they moved their Gorilla Glass sales volume from down 15 percent quarter-on-quarter to down 25 percent quarter-on-quarter,” he said. “I think they’ve got structural problems, and I don’t think the smoke clears anytime soon.”
“Fast Money” pro Tim Seymour sounded more bullish.
“I would just say that the opportunity to see it in other applications is very real, though,” he said. “I mean auto, household appliances, at least the large multi-touch monitors and what not. You’re getting outside of at least your iPhone structure and the LCDs, which Joe is talking about, is clearly a place where there is overcapacity. But at 7½ times earnings, this is still a very strong company and brand.”
Seymour said new end uses for Gorilla Glass 2 were the factors that investors should follow.
“I don’t remember the last time that I saw a component maker for handsets advertise their products individually and having that product used as a selling point for those handsets, which is true for Gorilla Glass,” said trader Mike Khuow of Cantor Fitzgerald.
Khow said interest in the options side of this play has been growing.
“It’s obviously tough to try to catch the falling knife, but in this particular situation I think buying calls might not be a bad idea if you are looking out maybe six months or so,” he said.
Dan Nathan, FGC Securities options strategist, sounded more wary on Corning’s stock price.
“It’s 20 percent off the lows from October, but you know when you see some of these other stocks in the PC supply chain, like Intel, multi-year highs, you have to ask where this thing is going,” he said.
Corning shares closed up 1.8 percent at $13.99.
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Trader disclosure: On Jan. 10, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Nathan is long AAPL Jan puts; Nathan is long BAC Jan puts; Nathan is long MS Jan puts; Nathan is long NFLX Jan calls; Nathan is long INTC Jan put spreads; Nathan is long MSFT puts; Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; Finerman is short AAPL calls; Finerman owns BAC; Finerman owns JPM; Finerman is short IBM calls; Finerman is short MSFT calls
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