Corning Incorporated (GLW) Q1 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to Corning First Quarter Conference Call. As a reminder, this conference is being recorded. Now I'd like to introduce Ken Sofio, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning. Welcome to Corning's first quarter conference call. Jim Flaws, Vice Chairman and Chief Financial Officer, will start the call with some prepared remarks. Wendell Weeks, our Chairman and Chief Executive Officer; as well as Dr. Richard Eglen, Vice President and General Manager of Life Sciences, will join us for the Q&A. Today's remarks contains forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. They involve a number of risks, uncertainties and other factors that could cause actual results to differ materially. These risks are detailed in the company's SEC reports. And now, I'd like to turn the call over to Jim Flaws.

Thanks, Ken. Good morning, everyone. Hopefully, you had a chance to read the press release we issued this morning on our first quarter results. If you haven't, a copy can be found on our Investor Relations website. I'd like to begin with our key messages this morning. Two months ago, at our Annual Investor Meeting, we announced we were facing a significant reset in the company's profit levels. The reset was primarily due to significant price declines we were experiencing in our Display business over the fourth quarter of 2011 and the first quarter of 2012. We told you one of the most important objectives was to reduce the level of these very significant quarterly price declines. This morning, I'm very pleased to report we expect our glass price declines in the second quarter will be much more moderate than the average of the previous 2 quarters. In terms of glass shipments, Display volume was better than we expected in the first quarter. Volume at our wholly-owned business was up in the mid-single-digits sequentially versus our expectations of being flat. SCP volumes were down less than 10% sequentially, which was also better than our guidance of down in the low double-digits. We told you at our Investor Meeting that in addition to needing significant slowdown in the glass price declines, we also needed to continue to grow our other businesses. I'm very pleased that in the first quarter, all our other businesses grew sequentially. Specialty Materials sales were up 21%, led by the stronger-than-expected demand for Gorilla Glass. Sales in Environmental were up 12%, also more than anticipated. We also told you to reach our goal of $10 billion sales by 2014, we would supplement organic growth with acquisitions. Hopefully, you saw our announcement to acquire a significant portion of…

Thank you, Jim. Operator, we're ready to take questions for Jim or Wendell or Richard.

[Operator Instructions] Our first question comes from the line of Ehud Gelblum from Morgan Stanley.

It's Ehud. First of all, Jim, of course we know what ADME stands for. It's absorption, distribution, metabolism and excretion. I think that's what it means, at least. A couple of questions quickly. First of all, can you give us an update on the China tanks coming online and timing-wise and progress there? And you previously had talked about having 25% of your capacity off-line and spoke about one of your competitors having a 35% of their capacity online and that helping create a better supply demand balance. You made some comments that your own inventory of glass was low and so -- did I detect that you are bringing some of that 25% back online or are you letting the move to thin glass sort of add to your capacity? And so, where do you see the off-line amount of capacity a quarter or 2 out from here?

So your first question, on China. We haven't had a change in the display factory in Beijing. We expect the capacity to begin coming online in Q3. We're going to only bring up a portion of the factory, we're going to be very deliberate about how much capacity that adds. Obviously, we're already shipping by customer there from our facilities elsewhere, but we will start one tank there in the third quarter. In terms of our own capacity, we're not giving out the new number. We have brought out some Gorilla tanks. We are being very careful about how much capacity we have online, it's less than 25%, but we are keeping it in balance with what we see as demand. It's our feeling that the glass industry, overall, is doing exactly the same. We see no wholesale charge to light up a ton of capacity by our competitors. And so that's why we continue to believe we're, basically, pretty much in line with supply and demand.

If I could just ask a follow-up. On the Korea customer that you had the issue with over the last several quarters. Is that now settled and where do you stand with them, with respect to -- their clearly not down to 0, but where do they stand with respect to what they were purchasing from SCP, let's say 3 quarters ago, and is that now stable going forward or do you anticipate more gyrations?

So, 3 quarters ago, if you're talking about the summer quarter, it should be Q3. We clearly are -- they are purchasing at a lower level, probably not too far off of what they did in Q3, which is when we lost the share originally. Compared to Q2, obviously, it's a lot lower. But they are continuing to buy from us, we continue to talk to them. But as I indicated, I think, actually at your conference, we are not going to give very low prices to try and gain share back.

Our next question comes from the line of Mark Sue from RBC Capital Markets.

Jim, maybe if we could get a sense of the quarterly sequence of price declines in Display glass, it was bad for 2 quarters. It sounds as if it gets better as, near term, as capacity is taken out of the system. Is this kind of the new norm going forward? Maybe some insights into how the negotiations for pricing proceeded and what indications that holds for pricing discussions over the longer term.

Well, Mark, we had significant price declines in Q4 and Q1, at essentially all customers. They didn't happen exact same time at each customer, but in the end, all customers got significant price declines. We went for Q2, we obviously wanted to try and get back to a much more moderate price decline pattern, and that's what we rolled out. We were delighted that we were able to achieve that. We think the primary precursors to allowing that to happen is, number one, that capacity is more in line with demand; and number 2, that demand at retail has been okay. So that has worked for Q2. We obviously haven't negotiated the pricing for Q3. And I think the thing for you to pay attention to is if retail demand flowing through to the panel makers is as we expect in Q3 and Q4, and the industry continues to balance its capacity utilization from a glass point of view, that will be very favorable for pricing. But obviously, we are not giving guidance at this point in time for Q3.

Okay. And then Jim, separately, Gorilla Glass seems to be reaccelerating. What's driving that? Is that broad-based adoption in terms of applications or is it a concentrated customer that's kind of lifting your outlook for Gorilla Glass?

So I would say that we had some disappointment in the third and fourth quarter on Gorilla where we would say, in the end market, the demand for smartphones and the mix of smartphones, overall, is quite strong, as well as tablet sales were good. But that wasn't flowing through to us in quarter 3 and quarter 4, and now we feel like we are catching back up to that. The reason why we think we are off of it was that we do know that some customers built inventory in the first half of 2011. Remember, we were very tight on capacity, and then also, their own yields have been improving over that period of time. So what we're hopeful of is that the demand that we saw in Q1 is more representative of us being in line with the real end market, where smartphones and tablets continue to be doing quite well at retail, and that's why we hope that will continue in the second quarter.

Okay, so a more broad-based return.

Yes, so let me just add to that, in that it is broad-based and we view that it is driving more in line with what is happening with the market. It's just important to note, this is a long supply chain, it's a complicated supply chain. We take glass, we ship it to finishers who cut it and exchange it. They, in turn, ship it to a touch panel manufacturer. They, in turn, send it on to a ODM who then assembles the whole thing, and then finally, it goes to the brand who is the person that we sold to, really, originally. And each of these steps has different yields and different players have different yields, somewhere between 70% and 95%, depending on the step and depending on the player. And our market position is so strong in this. It means that classic supply chain variability, right? We're going to feel 100% of that. And so that can mean, just depending on how the supply chain works, that our glass shipments, in any given quarter, can be different than the end market pull-through. And that's what we experienced in the back half of last year and now you see us sort of moving in line with the overall pole. And we're going to continue to have some fluctuation here, not because anything bad that's happening, but only because of the strength of our position and the length and excitement in the supply chain.

Our next question comes from the line of Nikos Theodosopoulos of UBS.

Just a couple of questions. I guess the first one is, in the press release, you mentioned that you think that the LCD revenues could show growth in the second half of the year. Even under a more moderate price decline environment it would seem that, in the third and fourth quarter, you would have to have roughly 15% kind of sequential increases in volume to achieve that. So I guess the question is, what gives you confidence that, that would happen? And then first, quarter number one. And then question number two, on Life Sciences. I guess, maybe if I look at -- it's an area, I don't know that well for Corning. If I look at your other businesses, you have very high market share and leadership. And when I look at this business before you started acquiring companies, you were doing just slightly over $100 million a quarter, it didn't seem like a business you had material leadership. Can you give me an update on what you think your market share is in this business and what this -- why the rationale in doing these acquisitions? Do you think you could become a material leader in that segment?

So I'll start with Display. I think what we were trying to say at the back half of the year is that the volume available for glassmakers, from the flow through of retail back to the panel makers, would be substantially higher, driven by the fact that the end market is seasonally stronger then. And what has happened to this industry, for the last couple of years is that, in fact, people don't have to build for televisions back in April for the Christmas season, they can do it much closer. So what we were talking about is strength in volume, sequentially, compared to the first half of the year. I'll let Wendell maybe open on Life Sciences, why we find it attractive, and then ask Richard to add a few more comments.

To your point on leadership. It was exactly that, that we identified as the opportunity, Nikos, is that we could bring to bear some of the same things that make us be a leader in our other segments and become a leader here. And leadership in 2 ways that matter. I think one is innovation, where we've shown with our ability to grow organically at about twice the rate of the underlying market growth. And that has been solely due to our ability up bring more innovation to bear, and then also with brands. And so what you see us doing on the acquisition front is augmenting our already strong brand in the Discovery Labware market, with additional brands like Falcon, which are quite strong. And then, global expansion, which also plays to our strength because we're already very strong, as Corning, in a lot of the markets that are going to be the real hyper-growth areas for doing more discovery work in the Life Sciences area, which is where our product strength lies.

Yes. I mean, just a few words to add to that. I mean, a good number to bear in mind is that the Life Sciences division at Corning has grown about 16% from 2006 to 2011, and that's the combination of the innovation that's been brought through as well as the strategic acquisitions, of which, the proposed acquisition of the Discovery Labware business would be the fourth there. So as we grow and, as Wendell say, and expanded our geographic reach, we can now move with a broad product portfolio offering into both the academic research market as well as the drug discovery market as well.

Our next question comes from Amir Rozwadowski from Barclays Capital.

Jim, I was wondering if we could talk a bit about some of the ASP declines that you've seen. I mean, you said that there has been a reset, with respect to ASP declines, obviously, and with respect to margins on your Display business. With your commentary that you now expect to see sort of easing pricing declines going forward, should we now expect that, that -- largely, that reset is behind us or are you still somewhat cautious going into some of the forward quarters to see some level of stabilization here?

Well, I would say that we're hopeful that we've achieved back-to-the-moderate level. If you go back over most of the last 5 years, the majority of the quarters where this moderate price decline philosophy that we had brought out at the end of 2006, and we're hopeful that we have, with what we've achieved in quarter 2 and the conditions that we think are allowed that, that we'll get back on that. I cannot guarantee you that we've achieved that in perpetuity, but what we have done is to try and have capacity be in line with the demand, and we think that allows for more moderate price declines. We achieved it in Q2. We're hopeful the same set of conditions will allow us to achieve it in the back half of the year. I can't make that guarantee yet.

Okay. That's helpful. And then if I think about sort of innovation on the LCD TV market, I mean, a lot of us investors have seen some of the developments on the OLED side, at CES earlier this year. There's been a lot of talk, also, of possible new entrants into the TV market, perhaps bringing some of their innovation to bear, from other tangential markets. I was wondering if you could give us an update on where you see sort of OLED development and its impact for you folks, and whether or not you are seeing potential new entrants that could help drive further -- either replacement sales or some level of increased innovation that gets people a bit more excited about replacing televisions here?

It's a great question, because as the LCD market has been going through the great challenges and sort of maturity that it has been, what our customer base has done is to invest very strongly in new innovations. I think OLED captures a lot of the headlines. But really, it's part of a overall innovation trend around high performance displays that are in the area of doing very high pixel count displays, as well as thinner, faster refresh, and then OLED adds the opportunity of a little bit more dynamic color with the potential to go even thinner. These higher performance displays, you put -- do 2 things that are helpful. First, the point you're making, which is higher performance displays encourage the market to trade up because it's more visible, literally, what it is you're looking at. And then the other is, from our perspective, it puts way more challenges on the glass itself, because the way you get a higher pixel count-style display is by putting -- by making more complicated electronics packages which put more stress on the glass, which offer us the opportunity to innovate. So those, I think, the 2 positive forces. There's a lot of different technology nodes out there. And what we're doing is covering our bets across, as you saw with the new OLED venture for glass with Samsung, who is the leader in OLEDs. And as you see, when you start to hear things like oxide TFTs, all of these new backplane technologies. We're also having a significant amount of effort and innovation in that space, and alliances with the leaders in that space as well. So, overall, we look at the amount of innovation in LCD right now, in our Display business, to be really at a high. And you're not going to see it in television first. Where everybody is focused is where the growth is at, which is in the same areas that Gorilla is at. So that going to tend to be in mobile displays -- is where you're seeing the bulk of the focus. There is work going on TVs and large size, but I think that's going to be a little bit later, as opposed to sooner, in terms of the size of its impact on the display technology landscape. If that makes sense to you.

That certainly is very helpful. And perhaps, on the question around meaningful [ph] potential entrants into the LCD TV market, have you folks been seeing any or can you even comment on that?

I cannot comment on the activities of any of our customers. It's for them to comment.

Our next question comes from the line of Rod Hall from JPMorgan. Rod B. Hall - JP Morgan Chase & Co, Research Division: I guess, I've got 2. One is a little bigger picture question about the industry, the panel industry. So not profitable and marginally profitable. I guess that's the primary reason that pricing remains sort of volatile and uncertain in the future. And I just wonder if you guys could comment a little bit about what it is that repairs that industry profitability. Is it only demand that we have to look forward to or are there other things that could happen that help these panel manufactures to get more profitable so there's not much pressure on pricing. I guess that's my first question. And just a quick housekeeping question for Jim. I didn't hear you mention the overall industry glass volume, up to be -- glass volume for Q1 and I wonder if I just missed that or if you didn't mention it, if you could talk about that a little bit.

So we didn't give out the glass volume for Q1. We stopped giving at that level of detail about the supply chain. In terms of the panel industry, I'll start and ask Wendell to jump in. I think, what we have seen over the past quarter is stabilization and slight price increases in panel prices. And as Wendell was talking about, we've seen the industry, I think, slowing their capacity additions or actually, in some cases, stopping them. And we see them focused on products that could bring them higher revenue off of that capital, as Wendell was talking about, with some of the high performance displays. Wendell, anything you'd like to add on the industry?

First, I think you're on a really excellent question in that the Display industry, our customer base, are quite challenged financially. And I think there's 3 things that they're doing to try to address that. First is getting an industry structure, where you see a sweeping set of moves by a bunch of different players as they either emphasize or deemphasize their investments in the space and consolidation. That, basically, is aimed at demand versus supply balance and that's where Jim is addressing. And the best proxy for that usually, one way or the other, is what's happening with panel prices and none of us would overreact to the latest sort of relative stability in panel price. I think we just got to look at this going forward and see how that plays out. Second is what's leading to their challenges is, first, the market wasn't as big everybody was expecting. And second, there's lack of strong differentiation in the product sets. That's where you see the emphasis on innovation for high-performance displays, which by the way, people talk about OLEDs. Note, oxide TFT technology, which is a new backplane technology, is revolutionizing what LCDs can do. It is making them faster refresh rate, much higher pixel count, it's way more dynamic displays. So it is far from over on which displays are going to win, in which segment. But you see that strong focus on differentiation, all right? And we'll see how that plays out in the technology nodes in one area or the other. And then, finally, you see the focus on those areas in the market that are growing the strongest. And their profitability pools are more aimed at the smaller mobile areas and that's why you see the emphasis towards that space. So I think those are the 3 things that the customer base is working its way through and we'll have to see how it all plays out. Clearly, the best and most important thing that can happen in the near-term is for the market, the end market, to perform in line with our expectations and theirs and that'll certainly help create the type of environment that's a little more stable.

Our next question comes from the line of Jim Suva from Citi.

I'd like to ask, with your commentary about more moderate pricing, was that something kind of in a range of 3% to 4%? As I noticed, the company did not say like historical ranges which had traditionally been down closer to 2%. Or sort of differently, is the future pricing now slightly more aggressive or am I just being too sensitive on the wording, as I think you know, I'm a sensitive guy.

We think all our analysts are sensitive. Don't read too much into the wording. I will tell you that the price declines are significantly down from what we experienced in Q4 and Q1. And I'm not going to give out an exact number for competitive reasons, but you'd be very pleased by the reduction in the price declines that we've had, particularly because you're a sensitive guy.

I take you back to your original plan, I believe it was in the 2007 time period or something, where you implemented this new pricing discipline nature of disciplined pricing. Does that take you back to that type of level or -- I guess, what I'm trying to get at is are we back to the original plan of pricing or something just slightly more aggressive?

I'm sorry, Jim, I'm not going to give you an exact number, for competitive reasons.

Okay. Well maybe I can ask a different question. On the gross margin, I think I heard you mention they will be down about 1 point. If that's correct, does that imply that you think maybe Q2 will be the bottom for your gross margins or will some things such as ramp in China, impact that going forward? And I don't if when you ramp China, are you just layering in that additional supply slowly or will you be taking off production elsewhere in the impact to gross margins?

In terms of our gross margin -- in terms of China, we will balance all of our production against what we think the market needs. So if China came up and we didn't need it, we need to light one tank there, we would cut back elsewhere. But we actually think that in quarters 3, which is when China would start, and quarter 4, that the glass demand will be higher if we're right about the normal seasonal uptick at retail and the fact that the supply chain doesn't appear to be building excess inventories. So you should -- based on what we think, you shouldn't expect China to be a drag along profitability of Display. In terms of our gross margin, as to whether Q2 was the lowest, it all depends on what we see in Q3 and Q4. If our hopes turn out, that we're back on a path of moderate price declines and we see volume grow at a greater rate in Q3, that will improve Display gross margins and that will improve our corporate average gross margin.

Our next question comes from the line of Simona Jankowski at Goldman Sachs.

It's Simona Jankowski here. Just a couple of clarifications on your Display business and then a couple of questions. I just wanted to clarify first. In terms of the upside you saw in the quarter, on your volumes, was that better demand that you saw or was there some better share gains for you at some of your customers, particularly as you caught them up on some of the pricing? And then the other clarification I had was on the competitive situation at your Korean customer. Looking at that now, do you feel that, that was really kind of unique and contained to that one customer or is there anything that would lead you to believe that there could be some similar type of situation, maybe not to that same magnitude, arising at other customers? And then I have a couple of quick questions.

So the upside was better utilization by various customers. That was the improvement. As to our characterization of what happened in Korea in Q3 and Q4, we regard that as a very unique situation and not something that we really are experiencing elsewhere.

Okay, that's helpful. And then just a couple of quick questions is, one, you didn't mention anything on the Olympics and I guess we've all kind of been burned with that in the past. But if could just give us a sense of what you're expecting or seeing in the supply chain ahead of that, if anything. And then lastly what impact, if any, do you see from the change there, at Sharp, in terms of Hon Hai's purchase of an equity stake in their 10G plant?

Well, I'll take the Olympics and let Wendell take Hon Hai. So we're not hearing the same buzz about the Olympics as we heard before the China one. And as you know, generally, our philosophy is that sporting events create a minor uptick. It's usually less than what people's expectations is. So we're actually quite pleased that people aren't getting overhyped about this. But we really don't -- I'm not hearing the buzz like we saw in 2008 before the Olympics in China. Wendell, would you like to comment on Sharp and Hon Hai?

Well, first I'd like to take a little piece of the Olympics one and then I'll move on to Hon Hai, which is -- actually, we were hoping that -- my daughter who is a track athlete was going to make the Olympic trials this year. So I could guarantee you there was going to be a huge upsurge on television purchases here in the upstate New York region. However, she injured her ankle, so now I don't know. Anyway, I digress. The Hon Hai Sharp play. So let's contain ourselves to the publicly disclosed information from Foxconn, Hon Hai, Terry Gou basically, and Sharp. Because I just have to, okay? In their rationale for the transaction, what it really comes down to is Sharp is an absolute leader in Display technology. They're the people that we did all the original work with LCDs. It is true. And they're a leader -- earlier in the call, you heard me talking about oxide TFT and the revolution going on for LCD, Sharp is an absolute leader in oxide TFT especially very large-size oxide TFT. So they have that strength. Terry Gou says I have enormous market access, but I'm missing the relevant technology to be able to take my market access and turn it into volume and panel plants that I have an ownership interest in. Hence, for the merger here or Terry Gou's investment in Sharp and in Sakai city. And the logic is, he will take his market access, fill up Sakai City and be able to take this new technology as well as some of the existing technology, and be able to greatly enhance the position of the non-Korean panel manufacturing industry. So that is the state of logic of the transaction. If that is indeed how it plays out, given our position in Sakai City, that would be a very favorable outcome for us.

Right. So, in that scenario, you would expect utilization to rise and indirectly you'd gain share in that situation?

In that situation, if that it is the way, indeed, that it plays out. It's early days. So sometimes industrial logic of transactions doesn't carry its way all the way through to reality. Sometimes it does and it's better. It's just a little early for us to be able to call it definitively.

Our next question comes from the line of Carter Shoop from KeyBanc.

First question. Assuming you increase inventory levels at the wholly-owned Display division in 2Q, can you comment on the magnitude of that increase?

It would not be significant such that you would notice the impact in our results.

Okay, that's helpful. And then, in response to a question by a particularly sensitive analyst, you mentioned that China won't be a drag to gross margins in the third quarter when that comes on line. Are you suggesting it's not going to be a net decline in gross margins? Are you saying that the increase won't impact at all? Because, I know when we brought on the Gen 10 Facility, obviously a much larger facility. I think it was 2.5 points drag to corporate gross margins in June '09 quarter. So you don't expect any drag there whatsoever. Is that accurate?

My comments was, I do not expect a drag on Display margins in Q3 from the start up of a tank in China. Going back to the Sakai City, it was a very large facility. And remember, both the Display business and Corning, Inc., were much smaller then. But definitely, I don't expect to see a drag from China based on what I know today with how we're going to phase the start up.

Great. And then just 2 housekeeping questions if I may. Did you say what Gorilla Glass sales were in the quarter? If so I missed that, and if you didn't, could you provide that?

We did not and we are not providing.

Okay. And then on the acquisition, the BD acquisition. When you say it's going to be slightly accretive in 2013, what type of financing are you assuming in that calculation? Is that a WAC or is that using cash financing?

We're doing it all with our cash, which we earn nothing on.

Our next question comes from the line of George Notter from Jefferies. George C. Notter - Jefferies & Company, Inc., Research Division: I guess, if I look back on pricing historically, you had these catch up scenarios play out where Corning, for periods of time, has experienced more moderate rates of price erosion. And then we found, 4 or 5 quarters down the line, that you've been kind of out of whack a bit relative to your competitors and you've had to catch-up period where your pricing comes down more aggressively. Do you think that scenario could play out here going forward? I guess, in other words, I'm wondering if you see everyone kind of behaving like you guys in terms of price erosion for the next few quarters?

Well, I would say, clearly, our hope is that we are getting back to moderate price declines for ourselves. And we're hopeful that, that's what the entire industry is going to do. And it'd be pure speculation for me to say how long that would last. I mean, our hope is that it continues for a long period of time.

Just one other point because of your lead-in on the logic flow I just want to touch on, which is -- usually, us, relative to our competition, yes, we indeed get a premium. That premium has that sort of couple 3% range of premium. That within that, we can maintain our share position at a given customer. Above that, pressures increase. So it's not so much that our -- we're not deliberately trying to expand that premium and that our competitors are dropping lower than us. Usually, what leads to this sort of disconnect, and more catch-up, is when market demand is very different than glass supply and our competition moves more aggressively on price in a given quarter. And then we are usually more restrained in our reaction and that's what tends to open up the gap. Just want to make sure, logic flow, we're all seeing it the same way. George C. Notter - Jefferies & Company, Inc., Research Division: That's very helpful. And then just switching gears real quickly. Any new perspectives on capital spending relative to what you guys were talking about that the Analyst Day? I think $1.8 billion this year and $1.2 billion to $1.3 billion for next.

No change to that. We still expect a decline in 2013. So you should count on those numbers.

Operator, it's Ken. I recognize we're coming up on the market open and with respect to people's time, so we'll take one more call.

Our last question comes from the line of Wamsi Mohan from Bank of America.

Can you give us, maybe, some indication of concentration now in Gorilla Glass versus where you where a year ago? There were a lot more devices that we're being launched, new devices. It seems like a lot of them have really not met with market success and it's been concentrated with a few key players that really have shown success. I'm trying to understand if we should expect significant volatility in this business outside of the supply chain issues that Wendell alluded to earlier. And what risk, if any, do you see from any substitution of alternative materials? And I have a follow-up.

So I'll comment on concentration. I think that, in smartphones, we're seeing demand by a number of players. The things that you referred to, last year, really were the launch of the early tablets by some people who didn't do that well. But we are seeing broad-based demand in smartphones for Gorilla. Wendell, you want to comment on competition?

Yes. So competition continues to be about the same as it was last year, which is, there has been competition throughout last year. There is competition now. We've been blessed with continuing to have our very strong position. The change between Gorilla Glass 1 and Gorilla Glass 2 sort of reestablished an advantage again. Enabling customers to go about 20% thinner and have the same strength. And so, following our classic model, which is do a combination of product-leading innovation, together with strong process work to develop competitive cost advantage, that typical model for us continues to work right now in Gorilla. And hopefully more innovation to come, so watch this space.

And as my follow-up here, you mentioned oxide TFT several times today. So I'm curious to get your opinion on the possibility of the use of lower quality alkali glass as one of the 2 sheets of glass if oxide does become the backplane technology of choice?

That's a very good question. So, oxide TFT is going to require 2, probably, higher performance pieces of glass relative to what it is, is used today. And that mainly has to do with that the backplane is more challenging. If the backplane is more challenging, then you're creating an overall sandwich and then you want to match the expansion rates between the top and the bottom of that device. If you have an alkali containing glass in the top, first, you have the potential for poisoning in these relatively complicated electronics packages. But also, you have different rates of thermal expansion. So those factors will tend to bring you into a more concentrated approach of 2 pieces of technical glass. You hear the more 1-piece, 2 pieces of glass when you hear about OLEDs and especially those OLEDs that are a little bit lower pixel count and whether or not it's bottom emission or top emission. Bottom emission has the potential to use a different encapsulant material other than glass because it's coming out the bottom. The top of it doesn't necessarily need to be transparent. Most of the work that we are seeing, right now go on, is leaning towards the technology node of 2 pieces of glass. But this is going to be a continually evolving technology as the industry seeks true differentiation.

Yes. Just a couple of quick comments at the end. First of all, we're going to have a fairly robust Investor Relations schedule over the next months. There are actually 4 conferences. First, we'll be at Jefferies Global Conference in New York City on May 8; and then we'll be in the JPMorgan TMT Conference in Boston on May 15; and back in New York City at the Barclays TMT Conference on May 22; and finally, at the Bernstein Strategic Decisions Conference in New York City on May 31. So hopefully, you gather we'll be on the road a lot. We would love to see you all in person. Lastly, our annual shareholder meeting is going to be held tomorrow, right here in Corning, New York. Staring at 11:00. If you happen to be in the Corning area, please stop by. But for those who can't, we will be audio-casting on the website, for the speeches. And to wrap up, we've just completed 4 months of the year and we continue to feel very good about our results. Our non-display businesses are all performing well and continue to demonstrate the growth potential we've been anticipating. And in Display, we're more encouraged now, than we were just a few months ago, especially on the pricing front. We're looking forward to continuing this momentum as we head into the second quarter and we will continue to keep you updated along the way. Ken?

Thank you, Jim, and thank you all for joining us today. A playback of the call, available beginning at 10:30 AM Eastern Time today. It'll run till 5 PM Eastern Time on Wednesday, April 25. To listen, dial (800) 475-6701, the access code is 244213. And the audio cast, of course, available on our website during this time. Operator, that concludes our call, please disconnect all lines.

Thank you.

Thank you all.