Corning's numerous problems go well beyond the collapse of the teleconomy. The company is essentially betting everything on a return of demand for its fiber-optic cable and equipment. Perhaps more troubling, its capital structure is also in shambles, meaning that at least an organizational restructuring -- and maybe a recapitalization -- almost assuredly lie ahead. The fiber market won't likely return to its heady levels of yesteryear. ... Now, fewer customers exist for that fiber, and that compounds Corning's problem. Only the cable companies (AOLTW, Comcast, Verizon, BellSouth) have any capital to spend. Plus, pricing declined ... Fiber demand would have to skyrocket for revenue to even remain flat. ... [And capital expenses put] the company in a tight spot. ... The bottom line is that Corning will either end up in default of its credit facility or be forced to raise some cash. Neither scenario does existing shareholders any favors. |
