Corning CEO flags fiber ‘disconnect’ as optical sales slide 6%

Corning’s profit plunged 70% year on year in Q1 2023 as the company posted declines in both overall and optical segment revenue. On an earnings call, CEO Wendell Weeks said the latter isn’t just due to inventory correction but a “disconnect” between stated deployment goals and actual rollouts.

Consolidated revenue fell 14% to $3.2 billion, with net income of $176 million a fraction of the $581 million Corning posted a year ago. Weeks attributed the change primarily to pricing actions and a greater-than-usual seasonal pullback in order volumes that the company previously predicted. Revenue from Optical Communications – Corning’s largest segment – fell 6% both year on year and sequentially to $1.1 billion.

Weeks said the pullback in optical was “associated with the pacing of several large customer projects.”

When pressed about whether the issue was customer pacing or inventory correction, Weeks acknowledged the latter is “certainly part of it.”

“The thing about inventory is how much they put in the ground determines how fast they burn through their inventory and of course, supply chain folks really across the globe since they couldn't get everything they needed, for sure, over ordered and did all sorts of things,” he said.

But Weeks argued that when he looks at the “actual ground getting moved, the actual data centers being built, there’s a little bit of a disconnect” between those results and stated deployment goals.

Thus, he said, Corning isn’t necessarily expecting the market to bounce back in the second half of the year as a company might if it believed inventory correction was the only issue at play.

The focus on what’s driving the slowdown in optical sales comes after several other telecom vendors warned revenue was expected to come in lower than forecast due to customer inventory correction. Lumentum, Viavi and Adtran were among these.

But there appear to be some mixed signals in the market. Optical vendors Ciena and Infinera both told Fierce demand remains strong and reiterated their Q1 guidance. Meanwhile, Nokia posted a 47% sales jump in its Optical Networks division and a 15% jump in IP Networks revenue. Though it reported a 5% decline in Fixed Networks, it attributed this to a slowdown in fixed wireless access sales rather than a fiber slump.