Corning in Today’s Data-Driven World

Douglas Ott (0:05)

Preferred Shares is a podcast started by three guys interested in business, history, and business history. We follow our interests and go down the rabbit holes of current and bygone topics. We'll talk about individual companies, product wars, famous founders, forgotten failures, and anything else that strikes our fancy. To find our episodes and show notes, please visit our website at preferredsharespodcast.com.

The hosts for the podcast are Devin LaSarre, Douglas Ott, and Lawrence Hamtil. Devin is a private investor with a background in design and brand development and is the author of the Invariant newsletter. Douglas is a founder and chief investment officer at Andvari Associates, a registered investment advisor. Lawrence is a co-founder and principal at Fortune Financial Advisors, also a registered advisor. All opinions expressed by the podcast hosts and guests are solely their own opinions and do not reflect the opinions of their respective employers. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Andvari and Fortune Financial may have positions in any of the securities discussed in this podcast.

Hello and welcome to episode 37 of the Preferred Shares Podcast. My name is Douglas Ott and I'm joined by my co-host, Lawrence Hamtil. In our prior episode, we gave a brief overview of the 175 year history of Corning Glassworks. Today, we have Will Kerwin back on the show to talk more about the present day Corning from the perspective of an analyst and potential investor. Will is an analyst at Morningstar covering a portion of the tech sector and he's chatted before with us about Amphenol. So Will, thank you and welcome back to the show.

William Kerwin (1:58)

Thanks for having me guys. Good to be back.

Douglas Ott (2:01)

Great. And let's just start off with the fact that Corning is a business that's 175 years old. How would you describe them to someone who has never heard of them?

Are they a tech company? Are they a glass company? Are they a fiber optics company? Just how would you describe this business to the average investor or average person?

William Kerwin (2:23)

I think I'd say yes to all of those. So it's really an all of the above story.

I think we had talked previously that any attempt to kind of classify or pigeonhole Corning into one category there is going to be a losing battle. But I think technology is how I would describe it broadly. And then it really comes down to this core of material science. And most of that centers around materials that are related to or just are glass. And so I think it's informative to look at the end markets. And so fiber optics, I'm sure we're going to talk a lot about today, are the growth outlet. They're in huge demand for data centers and AI today. That's becoming close to a majority of the business. But there's so much else going on. So you have fiber optic cables that are made out of glass. You have display glass for the monitors that we're using today while we record for large panel TVs. You've got cover glass for smartphones like the iPhone, camera glass, and then kind of a whole host of other smaller to the overall top line, but large from an absolute basis when you think about pharmaceutical glass, automotive glass is one vector, and then they're getting into solar panel production as well. So material science, technology, glass, I would say yes and to all of those.

Lawrence Hamtil (3:39)

Can you give us kind of an overview then, Will, of sort of like what's the big picture? How do you divide up Corning's revenue exposure by end markets? What are their major segments?

William Kerwin (3:50)

So that optical fiber is really the dominant one that's front of mind today. This has been a large business for them for some time, but we're seeing with the demand for hardware infrastructure to support AI and generative AI data centers, it is in more demand than it really ever has been. So today that's somewhere in the 40 to 45% range of sales, but we think the growth is gonna take that to a pretty substantial majority in the next five years. So you have optical fiber and really, I guess, what is this to start? So fiber optic cables are literally just made of glass. And so rather than a copper cable transmitting an electrical signal, you code these signals into pulses of light that then transmit through this kind of pure, clear glass fiber. And Corning is vertically integrated really across everything that it does. And so for fiber optics, that looks like they're literally creating the glass cable.