Gorning is turnaround stock that was almost destroyed by tech bubble and their bet on optical networking during that time. Management have done good job on restructuring 100+ year technology company since.
Gorning has lot of technology for glass and ceramic and does business in three main segments LCD substrates, Optical communications and clean diesel filters.
What makes Gorning interesting, as long-term investment is mainly their strong position in LCD HDTV market as supplier for a key component. I believe LCD technology will win in flat panel TV market because of lower cost, weight, better reliability and more energy efficient (Who want to have 800W plasma heating machine).
Gorning owns 50+% of LCD glass substrate market used for building these TV/Monitor panels. Substrate is about half of value for a LCD panel so it is not an insignificant place to be if you can protect your bottom line. Unlike situation for TV panel manufacturing the glass process is more difficult for new entrants and that is why we see only few companies competing for this market. Not like for LCD TV-panels where we have multiple Korean (LPL, Samsung), Japanese (Sharp) and Taiwanese (AUO,CMO,..) players ready to fight for market share.
Even Gorning is pretty aggressively priced on their current fundamentals there is upside as flat panel technology goes to main stream. The second half looks good you can now get 32/37" HDTV even below $999 and electronic retailers are reviewing up their sales based on strong TV demand.
Those who like history seems to me like it is repeating, Gorning was the one of few companies who had sustainable profits in CRT TV market 50 years back as there was so many companies competing on the TV manufacturing. They had the complex process know-how that competition was not able to copy.
$23.77 (09/26/06)
