Tomahawk, WI 10/25/2013 (BasicsMedia) – Corning Incorporated (NYSE:GLW) may not be as well known as other technology companies in the world, but its services and products are equally important. The five divisions under which GLW ruins its business include Life Services, Specialty Materials, Environmental Technologies, Telecommunications, and Display Technologies. A few of the major rivals for this company with market cap of $24.78 billion include 3M Co, TE Connectivity Ltd, PPG Industries Inc, and Thermo Fisher among others. GLW’s new deal with Samsung is causing a lot of excitement.

GLW Buys 43% Stake in Samsung’s Korea Venture

GLW has bought stake in Samsung’s LCD JV, and this deal will run for not less than 10 years. GLW is already known all over the world for its Gorilla Glass Screens that are used on tablets and smartphones everywhere. News that is has entered a deal with Samsung Electronics has seen its shares shoot up within the last few hours. This deal ensures that it will not run out of revenue since it will be supplying Samsung Electronics with liquid crystal display glass for the next ten years until 2023. There are suggestions that the two firms could extend this deal after 2023.

The deal with Samsung involves GLW’s purchase of a 43% stake in a joint venture owned by Samsung in Korea. This deal ensures that Samsung receives Corning shares worth $1.9 billion. Samsung will then invest another $400 million in buying GLW’s preferred shares. When this deal goes through, Samsung will own 7.4% stake in GLW. It will purchase GLW’s shares that will remain unconvertible for a period of not less than the next 7 years. If you expect the transactions to be concluded right away, you will have to wait until the first quarter of 2014.

GLW Board Fully Backs Deal with Samsung

The deal between GLW and Samsung has the full support of the former’s board. They have approved the buying back of GLW shares worth close to $2 billion, in the hope that this move will not cause the dilution of its shares. By taking over the Samsung venture in Korea, GLW receives close to $1.2 billion in cash, which is already available as demonstrated through the former’s balance sheet. This agreement will help GLW to increase its sales by close to $2 billion every year, and will contribute around 20% to the earnings, thus is important to shareholders.

The deal between GLW and Samsung will help Corning to embark on a cost-cutting spree whose full effects will start bearing fruit in 2015. The company has not released its financial results for the three month period running from July to September, but it has said it will do so on October, 2013. It has already indicated that its next quarterly results will beat analysts’ expectations and based on the positive feedback the deal is already attracting, I think GLW is on the right track on many fronts. Any association with Samsung was always going to be of huge benefit to GLW.

This deal will probably not have a direct bearing on the financial results that will be announced on October 30, 2013. However, I expect it to play a significant role in the next quarter after this one.

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