Corning Incorporated (GLW): The Supplier Driving Apple Inc. (AAPL)’s Next Round of Growth

The most interesting Corning opportunity
This all leads to the most interesting opportunity for Corning. As the company receives outsized attention for Gorilla Glass’ use in iDevices and Willow Glass as the enabling technology for the next Apple product in focus, the real driver remains televisions.

If Apple does create an iTV, in one fell swoop it could help solve the problem that caused Corning to push so hard into Gorilla and Willow Glass in the first place: It could restart stagnant TV sales.

Televisions are projected to see either flat or negative growth across the next couple of years.

The problem is that consumers are content with their current televisions. Better “specs” on televisions aren’t enough to encourage an upgrade cycle, and today’s smart TVs are woefully underused because they’re sluggish and their user interfaces are terrible. Instead of buying a new TV, consumers are spending that money on new tablets or smartphones.

However, a television connected to a broader ecosystem would offer something foundationally different from what’s on the market today. It would begin a new TV refresh cycle. With Corning’s existing relationships with Apple, there’s a good chance it could provide glass substrates for an Apple TV. But the larger point is, as competitors rushed to catch up with Apple, it’d see outsized gains as glass prices for television stabilized and demand increased.

The most fascinating Apple supplier?
Corning provides a fascinating play on Apple. While it’s a supplier today thanks to Gorilla Glass, the net effects of mobile are hurting its business as mobile spending has shifted demand from televisions. Yet it might be the most advantaged supplier in the two areas that could define Apple’s future growth opportunities: wearable computing and television. With the stock at less than 11 times earnings, I’ve personally decided that the reward to Corning if Apple decides to pursue these products outweighs the risks if it doesn’t.

In any case, the future of Corning and Apple’s next wave of products suddenly seem intertwined. The next decade of technology advancements is beginning to take shape.

The article The Supplier Driving Apple’s Next Round of Growth originally appeared on Fool.com and is written by Eric Bleeker, CFA.

Eric Bleeker, CFA, has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple, Corning, and Nike.

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