Last Monday (September 16, 2019) Corning Incorporated (NYSE: GLW) announced adjustments to its third quarter financial forecast for the business unit as of September 30, 2019. The company lowered its financial expectations for Display Technology and Optical Communications, and the expectations for the other three divisions remained unchanged.

For Corning’s optical communications division, several major carriers are further cutting capital spending on fiber-optic deployments and fiber-to-the-home projects.  In addition, some corporate customers also spent less than expected. As a result, Corning now expects its optical communications division’s third-quarter sales to decline year-on-year as a percentage of the tens of lows, while the previously expected percentage reduction was a single digit low. For the full year of 2019, Corning expects its optical communications division’s sales to decline by 3%-5%, while the company’s expected percentage increase was from single digits to mid-range. Last year, Corning’s optical communications business grew by 13% year-on-year. Corning expects sales of operators and corporate networks to decline in the second half of 2019.

Corning announced this update to investors based on an assessment of current customer and market dynamics. Management is taking action to reduce costs to meet adjusted sales expectations.  A series of actions include adjusting the production capacity of display technology and optical communications, reducing operating expenses and delaying the progress of investment projects.

For Corning’s downward forecast of optical communications revenue, MKM Partners analysts said in a research report that Corning told investors that the weakness in the third quarter was largely due to telecom customers in emerging markets, not the US. Telecommunications companies; in emerging markets such as India, Corning feels competitive pressure from Chinese suppliers. Analysts also heard that Corning’s business growth in data center fiber sales to Web Scale customers in the first half of 2019 was very strong (about 30%), and these customers are digesting the inventory in the second half of 2019. So they believe that after 13% growth last year, Corning may be undergoing adjustments in customer fiber inventory.

Corning plans to officially announce its third quarter 2019 financial results on October 29, 2019 and update its outlook for the fourth quarter of 2019 on the same day’s teleconferencing with investors.