UBS Dismisses iPad Concerns on Corning Glass Warning

| Apple Stock Watch

Gorilla GlassUBS analyst Maynard Um told clients Wednesday that a warning from Corning about weakened demand for tablet glass had more to do with limited demand for non-Apple products than it did with Apple’s iPad. The analyst said that he wasn’t adjusting his forecast for Apple’s December quarter iPad shipments of 12 million units.

At issue was a warning from Corning on Tuesday that the company was cutting its estimates for its Gorilla Glass business. The company said that rather than seeing a 15% decline quarter over quarter, it was now expecting a 25% decline. The firm blamed less-than-expected demand for tablet glass, a comment that lead many to wonder if Apple’s iPad demand was slacking.

Apple uses Gorilla Glass on its iPhone and iPad products, and according to Walter Isaacson’s Steve Jobs, it was Apple that got the company to begin producing the material (which was actually invented in the 1960s) for its iPhone product line several years ago. Apple does not, however, advertise its use of the material, something the company seldom does for any third party component.

Maynard Um told clients in a research note obtained by The Mac Observer that, “[Corning’s warning is] likely more related to weaker non-iPad demand,” and that anything related to Apple is to a “lesser degree.”

He noted that while Apple accounted for as much as 80% of Corning’s Gorilla Glass business in 2010, that has since shrunk to about 50% as Corning brought on new customers. He said the company may have ramped up production of the material, as well, though the research note was rather unspecific on these factors.

The biggest element of Mr. Um’s research note, however, is that he was already taking a conservative stance on Apple’s December iPad shipments. He estimated 12 million iPads during the quarter in part because of Apple’s less-than-expected iPad shipments in the September quarter.

“Given our view that the consumer wallet has not grown materially and if a consumer could not buy all iProducts simultaneously, perhaps there was a shift back in preference to a more traditional form factor with greater functionality (MacBooks were stronger than expected in the September quarter),” the analyst told clients.

So, with a conservative forecast in place to begin with, Mr. Um is not concerned that Corning’s warning had much of anything to do with Apple and the company’s category-defining iPad.

UBS is maintaining its price target for AAPL of US$510 per share and its “Buy” rating on the stock.

Shares of AAPL moved higher during the early afternoon session on Wednesday as the stock participated in a broad rally based on lessened concerns of a European banking crisis.

The stock was trading at $379.20, up $6.00 (+1.61%), on moderate volume.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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Comments

BurmaYank

Wow! What an outstanding ad photo for Gorilla Glass!

Bryan Chaffin

They can find my contact info on our Contact page! smile

wab95

I seem to recall someone not long ago commenting that Apple’s iPhone was shatter-prone because it (the phone) did not employ Gorilla Glass, but something cheaper.

My travel schedule prevented me from taking issue with that comment, as well as pointing out that, in many of Apple’s stores, glass staircases are used, supporting the weight of shoppers with their kit and kids. So the glass is tough stuff, but all glass, even level 8 ballistic-rated glass, will shatter.

Good to see the acknowledgement in print on this site, all the same.

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