Corning Secures $250M Apple Funding For Glass Manufacturing

Corning Incorporated’s (NYSE:GLW) R&D activities recently secured a significant boost for developing scratch-resistant glass for consumer devices with $250 million funding from Apple Inc. (NASDAQ:AAPL) . The investment is part of the $5 billion Advanced Manufacturing Fund earmarked by Apple for encouraging the development of advanced manufacturing components in the United States in support of President Trump’s America First policy.

The iPhone manufacturer had earlier awarded $200 million from this fund to Corning in May 2017 to expand its manufacturing capabilities. The continuous flow of dry powder has fueled the Gorilla Glass maker’s active R&D initiatives, and glass for all the models of Apple’s iPhones is being manufactured at Corning's Harrodsburg, KY facility. In addition, glass for iPads and Apple Watches are also being made by the company.

The current funding underscores the solid business relationship between the two companies spanning over a decade and their shared commitment for developing pioneering innovations to help the United States maintain a cutting edge over other countries. The investment is also likely to create future opportunities in Harrodsburg, which has already generated about 400 jobs at the technology development and manufacturing operations of the company.

Despite macroeconomic headwinds, Corning continues to outpace the market it serves, which underscores the resilience of its portfolio. The company is extending strong performance under its new 2020-2023 Strategy & Growth Framework, while focusing on its portfolio depth and financial strength to enhance shareholder returns.

Multiple factors should also drive Corning’s fiber optic solutions business over the next several years — primarily the increasing use of mobile devices that require efficient data transfer and efficient networking systems. Supporting this trend is the proliferation of clouds, which is now resulting in increased storage and even computing on a virtual plane. Since optical networks are more efficient and most of the existing networks are copper-based, the demand for optical solutions is particularly strong. Corning has several products focused on this market to meet the varying consumer needs and aims to benefit significantly from the underlying growth trend.

However, the company faces price erosion at the rate of 1-2% per quarter in the Display Technologies business. Although management believes that the fall in price could be tackled through cost containment, benefits from cost-control exercises are limited to certain extent. Notably, the stock has declined 19.9% in the past year while the industry has rallied 4%.

Corning currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry are Communications Systems, Inc. (NASDAQ:JCS) and UTStarcom Holdings Corp (NASDAQ:UTSI) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Communications Systems surpassed earnings estimates in the last reported quarter by an astounding 600%.

UTStarcom surpassed earnings estimates twice in the trailing four quarters, the average positive surprise being 56.4%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft (NASDAQ:MSFT) in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>