Corning: Inspiring Operator Business

Corning’s optical communications division achieved a revenue rebound in the third quarter, reaching $1.2 billion, as the company signed agreements with AT&T and Lumen. However, this fiber optic supplier stated that it is too early to assert that the industry has fully rebounded. In previous quarters, operators suspended spending due to inventory digestion.
Earlier this week, AT&T signed a multi-year agreement with Corning to purchase next-generation fiber optic, fiber optic, and connectivity solutions to support the expansion of its fiber optic network to more regions across the country. A key element of this agreement is that these platforms will enable AT&T to meet the construction schedule set by the Broadband Equity Access and Deployment (BEAD) program.

Wendell Weeks, CEO of Corning, stated during the third quarter earnings conference call that by using Corning’s latest pre connect solution, AT&T can accelerate its network expansion and improve network performance while minimizing deployment costs. They will utilize our latest combination of connectivity solutions, which fully comply with the BEAD program’s’ Build America, Buy America ‘regulations.
But AT&T is not the only carrier customer with significant cooperation plans with Corning.
Verizon recently announced the acquisition of Frontier, planning to expand its fiber coverage from 25 million to over 30 million by 2028.
At last week’s broadband strategy event, Verizon emphasized its partnership with Corning and stated that “we will provide technology to help them more easily achieve deployment goals Weeks said. They plan to significantly expand their fiber optic footprint.”

An encouraging prospect for telecom operators

Given its partnerships with AT&T and Verizon, Corning is encouraged by the prospects of the carrier industry.
Weeks stated that in the field of optical communications, he expects “operators to revert to purchasing at deployment speed, and their deployment speed will increase, thereby driving growth in 2025.” He also added that BEAD plans will become a more important factor next year. We expect the BEAD program to accelerate in the second half of 2025
Corning sees its latest agreement with AT&T in the carrier field as part of a growing trend confirmed in the company’s’ Springboard ‘plan.
Weeks said, “This is an encouraging signal for our operator business, indicating that the rebound of operators may soon begin
However, he also warned that the company “has not made such a judgment yet, as we hope to see the actual order and deployment rates for the next few quarters”.

The benefits brought by AI

Thanks to new deals with Tier 1 operator clients such as Lumen, AI has become a rising star in Corning’s revenue portfolio.
As part of its agreement with Lumen, Lumen will reserve 10% of its global fiber optic capacity annually for the next two years, and Corning recently launched its first outdoor deployment of its next-generation AI fiber and cable system. This system enables Lumen to install 2 to 4 times the number of optical fibers in existing pipelines.
Although Lumen is an important client, Weeks emphasizes that this is just one of several potential opportunities. This is an exciting new field, and we hope to seize other major opportunities
Corning has also launched a series of innovations to help its customers establish a new network to connect data centers that support artificial intelligence.
When we launched the Gen AI product in June this year, we expected our enterprise business to grow at a compound annual growth rate of 25% over the next four years, “Weeks said. After a year-on-year growth of 42% in the second quarter, Corning’s enterprise business increased by 55% in the third quarter.
Weeks said, “This growth reflects the gen AI opportunities within data centers.”

Operators drive growth in optical communication

Optical communication sales were a key contributor to Corning’s third quarter performance. Corning reported that its optical communication sales in the third quarter were $1.2 billion, a year-on-year increase of 36%. One of the key factors driving the growth of its optical communication business is the year-on-year increase in operator business.
Edward Schlesinger, Chief Financial Officer of Corning, said, “We are encouraged by new customer agreements, including our recent announcements with AT&T and Lumen. Overall, we expect cyclical and long-term drivers in the optical communications industry to continue driving industry growth in 2025 and beyond.”
Similarly, in Corning’s enterprise business, sales increased by 55% year-on-year due to the continued strong adoption of AI related connectivity solutions.
This marks another record breaking quarter for the business sector and strengthens our confidence in developing our enterprise business at a compound annual growth rate of 25% from 2023 to 2027, “Schlesinger said.
From an overall financial perspective, Corning’s GAAP sales for the third quarter were $3.39 billion, with core sales of $3.73 billion.
Looking ahead to the fourth quarter, the management of Corning expects an acceleration in year-on-year sales growth, with earnings per share growing at a faster rate than sales growth. Core sales are expected to be around $3.75 billion, with core earnings per share ranging from $0.53 to $0.57.