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Corning (GLW) Focuses on Increased Fiber Optic Production

Corning Incorporated GLW is increasingly focusing on higher fiber optic cable production as a surge in demand for broadband connectivity has led to a wide proliferation of fiber infrastructure across the globe. The company has expanded its optical cable manufacturing capacity in domestic markets and the European Union (“EU”) to cater to the rising demand.

The company is setting up a new production facility in Gilbert, AZ, which is likely to be operational in 2024. It will enable Corning to serve the rising demand for broadband solutions in the western part of the country and Canada. It is likely to generate about 250 jobs initially to boost regional economic development.

Corning is also setting up a new production facility in Mszczonów, Poland, to help meet the increasing demand for high-speed connectivity in Europe via large-scale production of low-cost optical fibers. The new facility will augment Corning’s optical cable and connectivity components production in Stryków, Poland, while strengthening its two-decade-old manufacturing operations in the country.

With this, the company has invested more than $500 million since 2020 to increase its fiber and cable manufacturing capacity in domestic and international markets. Multiple factors are likely to drive the company’s fiber-optic solutions business over the next several years, primarily the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, which is resulting in increased storage and even computing on a virtual plane.

Since consumers and enterprises are using the network more, there is a tremendous demand for quality networking. As optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is solid. Corning has several products focused on the datacenter with a portfolio consisting of optical fiber, hardware, cable and connectors that help it to create optical solutions to meet evolving customer needs.

Despite continued chip shortage and inflated raw material prices, Corning expects to witness 6-8% compound annual sales growth and 12-15% compound annual earnings per share growth through 2023 while investing $10-$12 billion in research, development & engineering, capital, and mergers and acquisitions. It plans to expand its operating margin and return on invested capital and deliver $8-$10 billion to shareholders, including an annual dividend per share increase of at least 10%.

To achieve its goals, the company expects an incremental $3-$4 billion in annual sales and an improvement in profitability by the end of 2023. GLW is extending performance under its 2020-2023 Strategy & Growth Framework and focusing on improving its product portfolio and utilizing financial strength to enhance shareholder returns.

Other notable stocks within the industry are Arista Networks, Inc. ANET, TESSCO Technologies Incorporated TESS and Harmonic Inc. HLIT.

Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista delivered an earnings surprise of 10.1%, on average, in the trailing four quarters.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry. TESSCO delivered an earnings surprise of 61.9%, on average, in the trailing four quarters.

Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices. Harmonic delivered an earnings surprise of 79.3%, on average, in the trailing four quarters.


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