CORNING, N.Y. & DENVER - Lumen Technologies (NYSE: LUMN) has entered into a significant agreement with Corning Incorporated (NYSE: NYSE:GLW) to purchase a substantial supply of optical fiber, a move set to more than double Lumen's intercity network fiber miles in the United States. This expansion is aimed at addressing the growing demands of artificial intelligence (AI) workloads and high bandwidth applications within cloud data centers.
The agreement, which is Lumen's largest cable purchase to date, secures 10% of Corning's global fiber capacity for Lumen over the next two years. This strategic move is expected to position Lumen to better serve major data center operators, including Microsoft (NASDAQ:MSFT), which recently announced its investment with Lumen to bolster its data center capabilities.
Kate Johnson, president and CEO of Lumen Technologies, emphasized the importance of the partnership, stating that the collaboration with Corning will help build the infrastructure necessary for the AI economy. Corning's innovative fiber and cable solutions will enable Lumen to fit two to four times the amount of fiber into their existing conduits, according to Wendell P. Weeks, chairman and CEO of Corning Incorporated.
Lumen's network, which is the largest ultra-low-loss intercity fiber network in North America, serves over 50 major cities across the country. The company continues to upgrade its infrastructure with a multi-conduit system that allows for rapid deployment of the latest fiber technology.
In addition to expanding its physical network, Lumen is developing a digital platform to enable cloud-like consumption of network services. This includes the Lumen Private Connectivity Fabric, a custom network solution that leverages both existing and new fiber routes.
The information for this article is based on a press release statement.
In other recent news, Corning Incorporated has been making significant strides in its financial performance. The company reported robust results for the second quarter of 2024, largely driven by the successful adoption of its new optical connectivity products designed for generative AI.
This led to a remarkable year-over-year growth of over 40% in the enterprise segment of their optical business, culminating in record sales. Furthermore, Corning has secured a strategic agreement with Lumen Technologies, allocating 10% of its global fiber capacity to support Lumen's AI-powered data center network.
Corning's future strategy, known as the Springboard plan, is projected to generate over $3 billion in annual sales in the coming three years. The company anticipates a compound annual growth rate (CAGR) of 25% for the enterprise business in the foreseeable future. In terms of earnings, Corning projects sales to reach approximately $3.7 billion and earnings per share (EPS) to range between $0.50 to $0.54 in Q3 2024.
Deutsche Bank recently upgraded Corning's stock from Hold to Buy, citing an expected significant growth in the company's EPS. The bank forecasts a CAGR of 14% from 2024E to 2027E for Corning's EPS, indicating a positive outlook for the company's future performance. This recent upgrade and Corning's impressive financial performance illustrate the company's commitment to strategic growth and innovation.
InvestingPro Insights
As Corning Incorporated (NYSE: GLW) cements its position as a key player in the technology and infrastructure sector through its latest deal with Lumen Technologies, its financial metrics and market performance offer insights into the company's current standing.
With a market capitalization of approximately $32.77 billion, Corning showcases its substantial presence in the market. The company's Price-to-Earnings (P/E) ratio stands at a high 78.46, indicating that investors may expect high future earnings growth compared to the current level of earnings.
InvestingPro Tips reveal that Corning has a history of financial steadiness and growth potential. A notable highlight is Corning's track record of raising its dividend for 13 consecutive years, demonstrating a commitment to returning value to shareholders. Additionally, the company has maintained dividend payments for 18 consecutive years, underscoring its financial resilience and investor appeal.
Moreover, analysts predict that Corning will be profitable this year, with net income expected to grow, which could be a reassuring sign for potential investors. For those interested in a deeper dive into Corning's financial health and future prospects, InvestingPro offers additional tips at https://www.investing.com/pro/GLW.
From a performance standpoint, Corning has experienced a large price uptick over the last six months, with a 26.73% total return, and a year-to-date price total return of 33.55%, reflecting a strong market confidence. This is further supported by a notable three-month price total return of 20.42%, suggesting a robust short-term performance.
Investors looking for further analysis and insights can find a total of 12 InvestingPro Tips for Corning Incorporated, which provide a comprehensive assessment of the company's investment potential.
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