康寧 (GLW) 2011 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the Corning Incorporated fourth-quarter results. It's my pleasure to turn the call over to Ken Sofio, Vice President of Investor Relations. Please go ahead.

各位女士、先生，歡迎參加康寧公司（Corning Incorporated）第四季業績發布會。我很高興把電話會議交給投資人關係副總裁 Ken Sofio。請開始。

Good morning and welcome to Corning's fourth-quarter conference call. This morning we have Jim Flaws, our Vice Chairman, Chief Financial Officer to read some prepared remarks before we move to the Q&A. And those remarks do contain forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. They involve a number of risks, uncertainties and other factors that could cause our actual results to differ materially. And these risks are detailed in the Company's SEC reports. Jim?

各位早安，歡迎參加康寧第四季電話會議。今天早上由我們的副董事長兼財務長 Jim Flaws 先宣讀一些事先準備的講稿，之後再進入問答。這些講稿包含《1995 年私人證券訴訟改革法》所界定之「前瞻性陳述」。其中涉及多項風險、不確定性及其他因素，可能導致我們的實際結果出現重大差異。相關風險已在公司向 SEC 提交的報告中詳述。Jim？

Thanks, Ken, good morning, everyone. Hopefully you had a chance to read the press release we issued this morning on our fourth-quarter and full-year results. If you haven't, a copy can be found on our investor relations website.

謝謝你，Ken，各位早安。希望各位已經有機會閱讀我們今天早上發布的第四季與全年業績新聞稿。若尚未閱讀，可至我們的投資人關係網站取得副本。

Looking back at 2011, it was a year when the Company achieved many milestones, but encountered significant headwinds. From a financial standpoint, Corning had an outstanding year. In 2011, the Company set records for sales, gross margin, and operating income without specials. All of our businesses in achieved increased sales year-over-year. Sales of Corning Gorilla Glass almost tripled. We achieved our eighth year in a row of positive free cash flow. We maintained our very strong balance sheet, raised our dividend, and initiated a sizable share repurchase program. We also brought significant new innovations to the market, as our patient investments in research are paying off. Newer products, such as Lotus Glass for OLEDs and now a new, much thinner cover glass in Gorilla Glass 2, have been very well received by customers. We believe this is an outstanding list of achievements despite less than robust growth from the developed economies around the world. However, it does not tell the entire story.

回顧 2011 年，這一年公司達成許多里程碑，但也遭遇顯著逆風。就財務面而言，康寧在 2011 年表現非常出色。2011 年，公司在銷售額、毛利率以及不含特殊項目的營業利益方面皆創下紀錄。我們所有事業部在 皆實現年增的銷售成長。康寧大猩猩玻璃（Corning Gorilla Glass）的銷售幾乎成長至三倍。我們連續第八年達成正向自由現金流。我們維持非常強健的資產負債表、提高股利，並啟動規模可觀的庫藏股回購計畫。我們也將多項重要新創新推向市場，因為我們對研發的耐心投資正在開花結果。較新的產品，例如用於 OLED 的 Lotus Glass，以及現在在 Gorilla Glass 2 中推出的全新、更薄的保護蓋玻璃，都獲得客戶非常好的回饋。我們認為，儘管全球已開發經濟體成長不甚強勁，這仍是一份非常亮眼的成就清單。然而，這並未呈現全部的故事。

We also encountered significant challenges in the second half of the year. In the third quarter, the display supply industry begin a significant contraction, ultimately resulting in the first year in LCDs history where the supply-chain inventory at the end of the year was lower than the amount at the beginning of the year. Our customers, panel makers, continue to operate at unhealthy financial levels. In the fourth quarter, we experienced significant pricing pressure, and a dispute at one of SCP's largest customers. Lastly, we witnessed significant upheaval in the solar industry, which impacted demand and price for polysilicon at Dow Corning.

我們在下半年也遭遇了重大挑戰。在第三季，顯示器供應產業開始明顯收縮，最終導致 LCD 產業史上首次出現：年底供應鏈庫存低於年初庫存的情況。我們的客戶—面板製造商—仍持續在不健康的財務水準下營運。在第四季，我們面臨顯著的價格壓力，以及 SCP 最大客戶之一發生爭議。最後，我們也目睹太陽能產業的劇烈動盪，影響了 Dow Corning 的多晶矽需求與價格。

So while we are proud of our accomplishments, we face, and continue to face, significant challenges. We're taking action to mitigate the impact these challenges by reducing costs, and adjusting capacity. Nevertheless, our profitability will be lower. This reset in the display industry, as well as the pressure at Dow Corning, have us feeling like the Company is approaching a new floor in terms of profitability. It is our plan to grow profits from this level.

因此，儘管我們為自身成就感到自豪，我們仍面臨、且持續面臨重大挑戰。我們正採取行動，透過降低成本並調整產能，以減輕這些挑戰的影響。然而，我們的獲利能力將會較低。顯示器產業的這次重置，以及 Dow Corning 所承受的壓力，使我們感覺公司在獲利能力方面正接近新的底部。我們的計畫是從這個水準開始提升獲利。

In short, we expect strong growth in sales and profits from Telecom, Environmental, Specialty Materials and Life Science segments over the next several years. Our confidence is high for these businesses based on their achievements in 2011, with their collective sales up 31% and earnings before special items up 136%, and also due to our market leadership in these businesses. Now, our display segment is likely not to grow, but will generate strong profits and cash flow. In fact, investors should anticipate significant cash flow generation over the next several years. We anticipate using this free cash flow to fund acquisitions to supplement organic growth, for dividends, and for share repurchases. We'll discuss some of those plans this morning in our outlook for Q1 of 2012 and at our annual investor meeting next Friday in New York City, we'll share our growth plans for the next several years.

簡而言之，我們預期未來幾年電信、環境、特殊材料與生命科學事業部的銷售與獲利將強勁成長。基於這些事業在 2011 年的成果—合計銷售成長 31%，不含特殊項目的稅前盈餘成長 136%—以及我們在這些領域的市場領導地位，我們對其信心很高。至於顯示器事業部，可能不會成長，但將帶來可觀的獲利與現金流。事實上，投資人應可預期未來幾年將產生顯著的現金流。我們預計運用這些自由現金流來進行併購以補充內生成長、發放股利，以及進行股票回購。我們將在今天上午針對 2012 年第一季展望中討論其中部分計畫，並在下週五於紐約市舉行的年度投資人會議上，分享未來幾年的成長規劃。

So with that intro I'd like to walk you through our Q4 results and our Q1 outlook. Fourth-quarter sales were $1.9 billion, a 9% decrease sequentially, in line with our expectations. Compared to last year, sales were up 7%. Gross margin was 43.7%, down from the third quarter of 47.1% and in line with our expectations. The lower gross margin was due to higher price declines in display, lower volumes in Gorilla Glass product line and seasonally lower volume in Telecom. SG&A and R&D were higher sequentially but in line with our expectations. As a reminder, operating expenses in Q3 were materially lower due to us lowering compensation accruals and also one-time credit.

在上述開場之後，我想帶各位回顧第四季業績以及第一季展望。第四季銷售額為 19 億美元，較前一季下滑 9%，符合我們的預期。與去年同期相比，銷售成長 7%。毛利率為 43.7%，低於第三季的 47.1%，亦符合我們的預期。毛利率下降主要因顯示器價格下跌幅度較大、大猩猩玻璃產品線出貨量較低，以及電信業務季節性出貨量較低。SG&A 與 R&D 較前一季增加，但符合我們的預期。提醒各位，第三季的營業費用明顯較低，原因是我們下調了薪酬提列，且另有一次性貸項。

Equity earnings were $321 million, but that included a significant one-time gain at Dow Corning. Excluding that gain, equity earnings were $241 million or 26% lower sequentially, which was slightly better than our guidance. Equity earnings also included a $12 million charge for an asset write-off, which we did not count as a special item. Earnings per share, excluding special items, was $0.33 and substantially lower versus Q3 and a year ago. Both equity earnings and EPS as stated here are non-GAAP measures and a reconciliation to GAAP can be found on our website.

權益法投資收益為 3.21 億美元，但其中包含 Dow Corning 一筆顯著的一次性收益。扣除該收益後，權益法投資收益為 2.41 億美元，較前一季下降 26%，略優於我們的指引。權益法投資收益亦包含 1,200 萬美元的資產沖銷費用，我們未將其列為特殊項目。不含特殊項目的每股盈餘（EPS）為 0.33 美元，較第三季及去年同期均大幅下降。此處所述的權益法投資收益與 EPS 皆為非 GAAP 指標，與 GAAP 的調節表可於我們網站查閱。

For the year, sales grew 19% and reached $7.9 billion, the highest level in our 160-year history. All segments grew year-over-year. Gross margin dollars achieved an all-time high, reaching $3.6 billion, an increase of 17% over the prior year. Operating margin, excluding special, items was also an all-time record of $1.8 billion. So from a consolidated standpoint we achieved significant financial milestones.

就全年而言，銷售成長 19%，達到 79 億美元，為我們 160 年歷史中的最高水準。所有事業部均較去年同期成長。毛利金額創歷史新高，達 36 億美元，較前一年增加 17%。不含特殊項目的營業利益也創下歷史新高，達 18 億美元。因此，從合併角度來看，我們達成了重要的財務里程碑。

Below the operating margin line however, lower equity earnings and the higher tax rate reduced our earnings. Our tax rate increased, as expected, from 3% to almost 15%. Equity earnings fell 25%. A combination of higher taxes and lower equity earnings shaved more than $0.5 billion from our bottom line. EPS for the year, excluding special items, was $1.76 and that compares to $2.07 in 2010. Again, these are non-GAAP measures; please see our GAAP reconciliation on our website. It is also important to note that our sales and EPS benefited significantly from the stronger yen this past year.

然而，在營業利益以下的項目中，較低的權益法投資收益與較高的稅率壓縮了我們的獲利。如預期，我們的稅率由 3% 上升至接近 15%。權益法投資收益下滑 25%。較高的稅負與較低的權益法投資收益合計使我們的淨利減少超過 5 億美元。全年不含特殊項目的 EPS 為 1.76 美元，相較 2010 年的 2.07 美元。再次強調，這些皆為非 GAAP 指標；請參閱我們網站上的 GAAP 調節表。同時也必須注意，過去一年日圓走強，對我們的銷售與 EPS 帶來了顯著助益。

Now I'd like to turn to our segment results for quarter four, and I'll start with Display. Display sales were $780 million in Q4, a decrease of 4% sequentially, but 4% higher compared to a year ago. Volume was in line with our expectations; Q4 results also benefited slightly from a stronger yen, which averaged JPYf77 for the quarter. Volume at SCP was higher than our revised guidance. As we disclosed, pricing at our wholly-owned business and at SCP was down significantly. Because the timing varies customer to customer and we're still in the first quarter, I'll discuss pricing more in the outlook section. Regarding the customer who SCP is in the dispute with, while we did ship them a significant amount of glass in the quarter, volumes were significantly lower than the original commitment from the customer.

現在我想轉到我們第四季各事業部的業績表現，先從顯示科技（Display）開始。顯示科技第四季銷售額為7.80億美元，較前一季下滑4%，但較去年同期成長4%。出貨量符合我們的預期；第四季業績也略受惠於較強勢的日圓，該季平均匯率為JPYf77。SCP的出貨量高於我們修正後的指引。如我們先前揭露，我們全資事業與SCP的定價均大幅下滑。由於各客戶之間的時點不同且我們仍在第一季，我會在展望部分再更詳細說明定價。至於SCP目前與其發生爭議的那位客戶，雖然我們在該季確實向其出貨了相當數量的玻璃，但出貨量仍顯著低於該客戶原先承諾的數量。

Equity earnings from SCP's LCD glass business were $192 million in Q4, a decrease of 14% from the third quarter. For your modeling purposes, SCP's fourth quarter LCD sales were about $790 million, a decline of 7% from the third quarter. As a reminder, this represents SCP's LCD sales only. Our public filings report SCP's total sales, which includes CRT and other product sales. For the year, Display sales were $3.1 billion, a 4% increase over last year. Volume growth was in was more than offset by price declines, sales benefited from a strong yen.

第四季來自SCP LCD玻璃業務的權益法收益為1.92億美元，較第三季下滑14%。供各位建模參考，SCP第四季LCD銷售額約為7.90億美元，較第三季下降7%。提醒一下，這僅代表SCP的LCD銷售額。我們的公開申報文件揭露的是SCP的總銷售額，其中包含CRT及其他產品銷售。全年而言，顯示科技銷售額為31億美元，較去年成長4%。出貨量成長被價格下滑所抵銷，但銷售額受惠於強勢日圓。

Now, moving to retail, on this slide you can see unit growth rates by region by month. Based on some final retail data for November-December, it appears our forecast for LCD television growth is still on track for 2011. Demand for LCD televisions at retail in Q4, including Black Friday, were in line with our expectations. In the interest of time I'm not going to go through the data region by region. This slide will become available on our website before the Q&A ends and I would be happy to answer any questions than.

接著談零售端，在這張投影片上各位可以看到按地區、按月份的單位成長率。根據11月至12月的一些最終零售數據，我們對2011年LCD電視成長的預測看起來仍在軌道上。第四季零售端對LCD電視的需求（包含黑色星期五）符合我們的預期。為了節省時間，我不會逐一按地區解讀這些數據。在問答結束前，這張投影片會在我們網站上提供，我也很樂意回答任何問題。

Now, as a reminder, the fastest-growing segment of televisions recently has been those 40 inches or larger. On this chart, you can see the growth rates. And we're seeing these higher growth rates across all regions including developing ones. For a glassmaker, size matters. We love to see these larger televisions are doing so well at retail, and the area growth rates are actually a lot more meaningful metrics since we sell glass by the square foot. Now, turning to this chart you'll see a comparison growth rates by quarter for units versus area. This is a trend we expect to continue in 2012 as well. Based on our preliminary Q4 retail data, we believe the worldwide LCD glass market was roughly 3.2 billion square feet in 2011, up only slightly from 2010.

另外提醒一下，近來成長最快的電視細分市場是40吋或更大的機種。在這張圖表上，各位可以看到其成長率。我們在所有地區（包括新興市場）都看到較高的成長率。對玻璃製造商而言，尺寸很重要。我們很樂見這些大尺寸電視在零售端表現亮眼，而以面積計的成長率其實是更有意義的指標，因為我們是按平方英尺銷售玻璃。接著看這張圖表，各位會看到按季度比較的成長率：以台數（units）對比以面積（area）。我們預期這個趨勢在2012年也會延續。根據我們初步的第四季零售數據，我們認為2011年全球LCD玻璃市場約為32億平方英尺，僅較2010年小幅增加。

I also have some updates this morning on the Display supply chain inventory model. In the fourth quarter we set out to understand how low inventory levels could theoretically reach. I'd like to share with you some of the learnings from that study, which was done with the help of McKinsey consulting firm. One of the more important learnings from the study was that the efficiency levels within the Display supply chain have been modestly better than we estimated. While we always model efficiency improvements each year, we had underestimated this metric in 2011. As a result, the revised model indicates the supply chain built inventory in the first half of 2011, peaking in midyear above 18 weeks. This is slightly higher than our original estimate of 17 weeks. Supply chain correction in the third quarter did result in a reduction of about three weeks of inventory. We believe there about 15 weeks of inventory entering fourth quarter versus our prior estimate of 14.

今天早上我也要更新一下顯示科技供應鏈庫存模型。在第四季，我們著手了解理論上庫存水位可能降到多低。我想與各位分享這項研究的一些收穫；該研究是在麥肯錫（McKinsey）顧問公司的協助下完成。研究中較重要的發現之一是，顯示科技供應鏈內部的效率水準比我們估計的略好。雖然我們每年都會在模型中納入效率提升，但我們在2011年低估了這項指標。因此，修正後的模型顯示供應鏈在2011年上半年累積了庫存，並在年中達到高峰、超過18週。這略高於我們原先估計的17週。第三季的供應鏈修正確實使庫存減少約三週。我們認為進入第四季時約有15週的庫存，而先前估計為14週。

McKinsey also indicated supply chain levels entering 2012 at the low end of what is considered to be a normal range, but they could trend lower. The study indicated supply-chain inventories could fall another half a week this year. Over the longer stretch of time, it's possible to imagine the average weeks inventory could continue to decline. Of course, this can change both higher and lower depending on supply chain sentiment. For example, if supply chain believes retail demand will be stronger, expect that there could be a short-term build up of inventory, and if there's concerns about the economy, less inventory could be carried.

麥肯錫也指出，進入2012年時供應鏈水位位於被視為正常區間的低端，但仍可能進一步走低。研究顯示，今年供應鏈庫存可能再下降半週。從更長的時間跨度來看，可以想像平均庫存週數可能持續下降。當然，這會隨供應鏈情緒而上下變動。例如，如果供應鏈認為零售需求將更強，預期短期內可能會增加庫存；若對經濟有所疑慮，則可能會降低持有的庫存。

This chart outlines the fluctuation of weeks of inventory since 2007 on the yellow line with the average on that time shown as a dotted blue line. As you see, the average level of inventory has been decreasing for the past four years. This is due to a number of factors that are consistent with a maturing industry, including lower growth rates, more experience leading to better forecasts of retail demand and of course, financial pressures across the value chain. I'll have some more comments about our expectations for 2012 in the outlook.

這張圖表以黃色線條呈現自2007年以來庫存週數的波動，並以藍色虛線顯示該期間的平均值。如各位所見，過去四年平均庫存水位一直在下降。這是由多項因素所致，且與產業走向成熟一致，包括較低的成長率、更豐富的經驗帶來對零售需求更好的預測，當然還有價值鏈各環節的財務壓力。我會在展望中再補充一些我們對2012年的預期。

Now, on the innovation front we're very pleased with the market acceptance of our new Lotus Glass since its introduction in the Fall. As a reminder, Lotus is an environmentally friendly, high-performance display glass developed to enable such new technologies such as OLED displays. While I'm on the topic of OLED, we were pleased to see a number of new large-size OLED TV prototypes on display at CES. And while these prototypes were quite expensive, as much as $10,000, we believe they showed consumers how beautiful a large OLED display can be.

在創新方面，自我們於秋季推出以來，新款Lotus Glass在市場上的接受度令我們非常滿意。提醒一下，Lotus是一種環保、高性能的顯示玻璃，旨在支援例如OLED顯示器等新技術。既然提到OLED，我們也很高興在CES上看到多款新的大尺寸OLED電視原型機展示。雖然這些原型機價格相當昂貴，高達1萬美元，但我們認為它們向消費者展示了大尺寸OLED顯示器可以有多麼出色的畫質。

We, here at Corning, are excited about the potential for OLEDs. At our core, we believe we are a display glass company, not an LCD company. So while the industry does not anticipate a significant number of OLED televisions until later in the decade, for example, DisplaySearch is estimated just 3 million sold in 2014, we have been actively engaged with customers on delivering a unique glass solution. Today, some of our customers are working on OLEDs two pieces of glass, given the low yields and higher cost when using plastics and metal. And even those customers who are pursuing a one-glass solution are also working with us on developing a two-glass solution. The reasons for this are clear to us. Other materials sets are not as inexpensive, and result in lower yields.

我們康寧（Corning）對OLED的潛力感到振奮。從根本來說，我們相信自己是一家顯示玻璃公司，而不是一家LCD公司。因此，儘管產業預期要到本十年後期OLED電視才會有顯著出貨量，例如DisplaySearch估計2014年僅售出300萬台，我們仍一直積極與客戶合作，提供獨特的玻璃解決方案。目前，部分客戶在OLED上採用兩片玻璃的方案，因為使用塑膠與金屬時良率較低且成本較高。即便是追求單片玻璃方案的客戶，也同時與我們合作開發兩片玻璃方案。其原因對我們而言很清楚。其他材料組合並不那麼便宜，且會導致較低的良率。

If the past year has taught us anything about consumers, it is this -- consumers are not willing to pay for high-priced televisions. We believe it will be very difficult for OLEDs to reach mass adoption if they're not priced appropriately. And to achieve lower price points, you need to lower costs. And we at Corning believe the two-glass solution will actually be the preferred path to this goal. We're going to have a lot more details on our OLED TV forecast and our unique position in the OLED market at our annual investor meeting next Friday.

如果過去一年讓我們對消費者學到任何事，那就是——消費者不願意為高價電視買單。我們認為，若OLED的定價不夠合宜，要達到大眾普及將非常困難。而要達到更低的價格帶，就必須降低成本。我們康寧相信，兩片玻璃方案實際上將是達成此目標的首選路徑。關於我們對OLED電視的預測以及我們在OLED市場中的獨特定位，我們將在下週五的年度投資人會議上提供更多細節。

Now let's turn to Telecommunications. Telecom sales were $490 million, down 13% sequentially, in line with our expectations. Compared to fourth quarter last year, sales were up 11%. For the full year, telecom sales were $2.1 billion, an increase of 21% over 2010. This segment experienced significant growth across all product lines. Our fiber-to-the-home sales were up 39%, and our enterprise network sales were up 10%. Even more impressive was the strong bottom-line performance of the segment. Net income, excluding special items, was up over 70% this year.

現在讓我們來看電信業務。電信銷售額為4.90億美元，較前一季下滑13%，符合我們的預期。與去年第四季相比，銷售額成長11%。全年而言，電信銷售額為21億美元，較2010年增加21%。該事業部在所有產品線均出現顯著成長。我們的光纖到府（FTTH）銷售額成長39%，企業網路銷售額成長10%。更令人印象深刻的是該事業部強勁的獲利表現。扣除特殊項目後的淨利今年成長超過70%。

In Environmental, sales were down $234 million, down 5% and in line with our expectations. When compared to the prior year, sales were basically even. For the year, Environmental sales reached $1 billion, the highest in the segment history, increasing 22% and driven by the surge in demand for diesel filters. And we're very pleased that our diesel business exceeded $500 million in sales for the first time. Net margins Environmental jumped from 5% to 11% in 2011, and net income almost tripled from $43 million to $121 million. We are delighted by the performance in Environmental and very pleased that we're improving in manufacturing and that our products are doing well with our customers.

在環境事業方面，銷售額減少2.34億美元，下降5%，符合我們的預期。與前一年相比，銷售額基本持平。全年環境事業銷售額達10億美元，創該事業部歷史新高，成長22%，主要受柴油濾清器需求激增帶動。我們也非常高興柴油業務銷售額首次突破5億美元。2011年環境事業淨利率由5%躍升至11%，淨利幾乎由4,300萬美元增至1.21億美元，接近三倍。我們對環境事業的表現感到欣喜，也很高興我們在製造方面持續改善，且產品在客戶端表現良好。

In Specialty Materials, sales were $238 million, down 20% sequentially, which is actually slightly better than our expectations. Compared to the prior year, sales were up 21%. The segment posted a net loss of $105 million in Q4, versus an income of $38 million in the previous quarter. The loss was due, primarily, to three events. First, we took an $83 million after-tax charge related to impairment of assets. These assets were used to make large sized cover glass. Due to low demand, we impaired a portion of these assets. We treated this as a special item.

在特殊材料事業方面，銷售額為2.38億美元，較前一季下滑20%，實際上略優於我們的預期。與前一年相比，銷售額成長21%。該事業部第四季淨損1.05億美元，而前一季為淨利3,800萬美元。虧損主要由三項事件所致。第一，我們認列與資產減損相關的稅後費用8,300萬美元。這些資產用於製造大尺寸蓋板玻璃。由於需求偏低，我們對其中一部分資產進行減損。我們將此視為特殊項目。

Second, there was an after-tax charge of $12 million, related to the write-off of Gorilla tanks at SCP. This charge was not treated as a special item. And lastly, due to the lower demand for Gorilla Glass in the fourth quarter, we ran our assets at lower utilization rates, resulting in lower margins. Gorilla Glass sales in the fourth quarter were $161 million down about 25% sequentially. The sequential decline, we believe, was due to improved yields at our customers and higher inventory levels within the supply chain.

第二，與SCP的Gorilla槽罐（tanks）沖銷相關，我們認列稅後費用1,200萬美元。此項費用未被視為特殊項目。最後，由於第四季Gorilla Glass需求較低，我們以較低的產能利用率運轉資產，導致毛利率下降。第四季Gorilla Glass銷售額為1.61億美元，較前一季下滑約25%。我們認為，這一季對季的下滑是由於客戶端良率提升，以及供應鏈內庫存水位較高所致。

As we've mentioned over the past few months, our visibility into this supply chain is not nearly as robust as it is in Display. To help you illustrate the chain, I've got a simple chart to show you. These are the steps it takes for our Gorilla Glass to make its way into a finished product. Even though our customer wins are actually with the original equipment manufacturer, such names as Samsung, Motorola or Acer, the glass gets shipped first to a finisher. At the finisher, glass is cut into parts and then chemically strengthened. The majority of our glass is shipped to only a handful of finishers, which is why you see in our public filings, there are only two to three material customers in Specialty Materials.

如同我們過去幾個月所提到的，我們對這條供應鏈的能見度遠不如顯示事業那麼強。為了協助各位理解這條供應鏈，我準備了一張簡單的圖表。這些是我們的Gorilla Glass進入成品所需經過的步驟。儘管我們實際上贏得的客戶是原始設備製造商（OEM），例如Samsung、Motorola或Acer等，但玻璃會先出貨給加工商（finisher）。在加工商端，玻璃會被切割成零件，接著進行化學強化。我們的大部分玻璃只出貨給少數幾家加工商，這也是為什麼在我們的公開申報文件中，特殊材料事業只有兩到三家主要客戶。

It's also the reason why investors will not see the name of the list of any of our OEM component suppliers. The strengthened glass is then shipped to a touch panel assembler who assembles the glass in the touch-panel module. There the touch panel ships to an ODM, assembles the entire consumer device, and lastly, it's shipped to retail under the OEM brand name. A lot more steps here in the LCD business. And for that reason, we need to get a better understanding of how much inventory is at each step. Our goal is to create a model similar to Display, but we have a long way to go.

這也是投資人不會看到我們任何OEM零組件供應商名單的原因。強化後的玻璃接著出貨給觸控面板組裝廠，由其將玻璃組裝進觸控面板模組。之後觸控面板再出貨給ODM，組裝整個消費性裝置，最後以OEM品牌名出貨至零售通路。相較之下，LCD業務的步驟要多得多。因此，我們需要更深入了解每個環節的庫存量。我們的目標是建立一個類似顯示事業的模型，但仍有很長的路要走。

Now on the right-hand side of this chart you can see our estimates for glass efficiency throughout the supply chain. And while the efficiency levels may not be that bad at any individual step in the supply chain, when you add up the low end of the cumulative losses, there's potential for significant inefficiency. For example, at the finishers, there is some glass that is lost in the process of cutting glass in device-sized pieces before chemically strengthening them. We've actually been working directly with the finishers and the touch panel assemblers to help them better understand how to handle and process their glass. We hope it leads to improved yields at our customers over time, and even though those improved yields will reduce demand glass for us, will lower the cost of device. And in the long run in consumer electronics, that's very important.

在這張圖表右側，各位可以看到我們對供應鏈各環節玻璃效率的估計。雖然供應鏈中任何單一環節的效率水準可能不算太差，但若將累積損耗的低端情境加總，仍可能出現顯著的低效率。例如在加工商端，在將玻璃切割成裝置尺寸的片材、並進行化學強化之前，切割過程會有部分玻璃損耗。我們其實一直直接與加工商及觸控面板組裝廠合作，協助他們更了解如何搬運與加工玻璃。我們希望隨時間推進能提升客戶端良率；即使良率提升會降低我們的玻璃需求，也會降低裝置成本。從長期來看，這對消費性電子產品非常重要。

For the year, Gorilla Glass sales were $710 million, almost triple a year ago. Gorilla Glass is one of our fastest-growing products in history, and the glass itself is our second-highest gross margin product today. For those of you who were at the Consumer Electronics Show, hopefully you had a chance to stop by our booth and to see the next generation of Gorilla Glass. We're calling it Gorilla Glass 2. Gorilla Glass 2 enables up to a 20% reduction in glass thickness, while maintaining industry-leading damage resistant toughness, optical transmission and scratch resistance.

全年而言，Gorilla Glass銷售額為7.10億美元，幾乎是前一年的三倍。Gorilla Glass是我們歷史上成長最快的產品之一，而該玻璃本身目前也是我們毛利率第二高的產品。若各位曾參加消費性電子展（CES），希望你們有機會到我們的攤位，看看下一代Gorilla Glass。我們稱之為Gorilla Glass 2。Gorilla Glass 2可在維持業界領先的抗損韌性、光學透過率與抗刮性的同時，將玻璃厚度最多降低20%。

This newest innovation was in direct response to our customers drive towards ever thinner form factors. And to put it mildly, we have a lot of interested customers. Gorilla Glass is now used by more than 30 major brands and designed into more than 600 product models spanning more than 600 million units worldwide. And we're going to have some very cool demos of the new glass at our annual investor meeting next week. So I'm going to have some more of this topic in the outlook.

這項最新創新是直接回應客戶對更薄外型設計（form factor）的持續追求。坦白說，我們有許多感興趣的客戶。Gorilla Glass目前已被30多個主要品牌採用，並導入超過600個產品型號，全球涵蓋超過6億台裝置。我們將在下週的年度投資人會議上展示一些新玻璃的示範。因此，我會在展望部分再多談一些這個主題。

In Life Sciences, Q4 sales were $143 million, 7% less than Q3 and flat compared to last year, in line with our guidance. For the year, Life Sciences sales were about $600 million, an increase of 17% over 2010. Excluding acquisitions, Life Sciences' sales were up 7%.

在生命科學事業方面，第四季銷售額為1.43億美元，較第三季少7%，與去年同期持平，符合我們的指引。全年生命科學事業銷售額約為6億美元，較2010年成長17%。扣除併購影響後，生命科學事業銷售額成長7%。

Now at Dow Corning, equity earnings were $129 million in Q4 compared to $89 million in Q3. Q4 included a one-time gain of approximately $80 million. Dow Corning had brought legal action against one of its polysilicon customers, which stopped taking product to enforce certain long-term sales agreements. The resolution resulted in a significant cash payment. Excluding this gain, equity earnings at Dow Corning were $49 million, down 45%.

接著看Dow Corning，第四季權益法收益為1.29億美元，第三季為8,900萬美元。第四季包含約8,000萬美元的一次性收益。Dow Corning曾對其一位多晶矽客戶提起法律訴訟，該客戶為了規避某些長期銷售協議而停止提貨。和解結果帶來一筆可觀的現金支付。扣除此項收益後，Dow Corning的權益法收益為4,900萬美元，下降45%。

Now, in response to falling poly prices, Hemlock has modified a number of its sales agreements to provide temporary pricing relief while preserving the long-term favorable relationships with its customers. In addition, Hemlock has decided to delay certain plant expansion activities until market conditions for polysilicon improve. It is in difficult times like this where being the lowest cost producer provides a key advantage. Today, Hemlock is the world's lowest cost producer of poly and it costs are still well below spot prices. Although reported spot pricing has actually ticked up in recent weeks, we still believe it's below production cost of our some of our competitors. Regarding the current poly supply and demand balance, we believe there continues to be a significant amount of excess capacity which will continue to put pressure on poly price.

現在，為了因應多晶矽價格下跌，Hemlock 已修改其多項銷售協議，在維持與客戶長期良好關係的同時，提供暫時性的價格紓困。此外，Hemlock 已決定延後某些工廠擴產活動，直到多晶矽的市場狀況改善為止。在這樣的艱難時期，身為最低成本生產商能提供關鍵優勢。目前，Hemlock 是全球多晶矽最低成本的生產商，其成本仍遠低於現貨價格。儘管近期幾週所報導的現貨價格確實略有回升，但我們仍認為其低於我們部分競爭對手的生產成本。就目前多晶矽供需平衡而言，我們認為仍存在相當可觀的過剩產能，將持續對多晶矽價格造成壓力。

Now, let's switch to the balance sheet. We ended the year with $5.8 billion in cash and short-term investments, declined from $6.4 billion in cash we had on hand entering fourth quarter. Of course, one of the major cash outflows during the quarter was our capital spending. The other was the cash we used to repurchase shares. We told investors we would be aggressive when the stock price is significantly lower than what we deem to be fair value, and we were.

現在，讓我們切換到資產負債表。我們在年底時持有 58 億美元的現金與短期投資，較進入第四季時手上的 64 億美元現金有所下降。當然，本季主要的現金流出之一是我們的資本支出。另一項則是我們用於庫藏股回購的現金。我們告訴投資人，當股價顯著低於我們認定的合理價值時，我們會積極回購，而我們也確實如此。

We began repurchasing stock in late October under the $1.5 billion share repurchase program approved by the Board earlier that month. In roughly a two-month period of time the Company spent about $780 million to repurchase approximately 55 million shares. Looking ahead, we expect to continue to be active in repurchasing our stock if it remains at levels below our estimate of appropriate value. I will not speculate on how fast we'll go through the remainder of the approved amount or what the Board will decide to do next. I can tell you, given our cash flow expectations over the next several years, we expect to have ample financial flexibility to fund additional share repurchases, M&A to supplement growth, or to increase the dividend.

我們在 10 月下旬開始回購股票，依據董事會於當月稍早核准的 15 億美元股票回購計畫。在約兩個月的期間內，公司花費約 7.8 億美元回購約 5,500 萬股。展望未來，若股價仍維持在低於我們估計的適當價值水準，我們預期將持續積極回購本公司股票。我不會臆測我們會以多快速度用完剩餘的核准額度，或董事會接下來會決定採取什麼行動。我可以告訴各位，考量未來幾年的現金流預期，我們預期將具備充足的財務彈性，以支應額外的股票回購、用以補強成長的併購（M&A），或提高股利。

Capital spending for the year totaled $2.4 billion and was in line with our previous guidance. I'm delighted to say we finished our eighth year in a row of positive free cash flow with $544 million. Very pleased with our ability to generate over $0.5 billion in the year when our capital spending was higher than usual.

全年資本支出合計 24 億美元，符合我們先前的指引。我很高興地表示，我們已連續第八年達成正的自由現金流，金額為 5.44 億美元。在資本支出高於往常的一年，我們仍能創造超過 5 億美元的自由現金流，對此非常滿意。

Now onto our outlook. This morning, we will be providing first quarter as well as some full-year guidance by business. I'm going to start with Display in the retail market. In the first quarter, we're not expecting much sequential change in the overall glass market. Volume at our wholly-owned business should be in line with the glass market. Volumes at SCP are expected to be flat or down double digits, depending on the outcome of negotiations with that key customers.

接著談我們的展望。今天早上，我們將按事業別提供第一季以及部分全年指引。我將先從零售市場的顯示器（Display）談起。第一季，我們預期整體玻璃市場不會有太大的季對季變化。我們全資事業的出貨量應與玻璃市場一致。SCP 的出貨量預期將持平或呈現雙位數下滑，取決於與該關鍵客戶的談判結果。

Now, looking ahead to the full year, we expect the retail market in terms of square feet to grow about 10% in 2012 from roughly 3.25 billion square feet to about 3.6 billion square feet Let me be clear. This is the amount of glass contained in LCD products sold to consumers, not the amount of glass that we're shipping to panel makers. The amount of glass shipped above and below the retail number will obviously be dependent upon panel maker utilization rates and the supply chain dynamics. At this time, our most likely case is that supply chain could actually add about 100 million square feet of inventory during the year. As the retail market grows, so does the amount of inventory and supply chain. In terms of weeks of inventory we actually expect supply-chain to contract by about a half a week. This is because we believe the supply chain will build inventory and square foot, both slower pace than the retail demand growth.

再往前看全年，我們預期 2012 年零售市場（以平方英尺計）將成長約 10%，從約 32.5 億平方英尺增加至約 36 億平方英尺。讓我說清楚。這指的是售予消費者的 LCD 產品中所包含的玻璃量，而不是我們出貨給面板製造商的玻璃量。高於或低於零售數字的玻璃出貨量，顯然將取決於面板廠的稼動率以及供應鏈動態。就目前而言，我們最可能的情境是供應鏈在今年實際上可能增加約 1 億平方英尺的庫存。隨著零售市場成長，供應鏈中的庫存量也會隨之增加。以庫存週數來看，我們實際上預期供應鏈將收縮約半週。這是因為我們認為供應鏈建立庫存（以平方英尺計）的速度，將比零售需求成長的速度更慢。

I've outlined our point estimates for retail demand and supply-chain inventory. Now, for your planning purposes we also have a downside case, with inventory being flat in terms of square feet rather than growing 100 million. And for retail demand, we have a variety of cases for demand being above or below the point estimate of 3.6 billion square feet, obviously driven by different economic scenarios. For modeling purposes we now expect LCD television units to be about 230 million this year, up about 10% versus 2011 and consistent with most industry forecasts. Again, we expect area growth to be higher. PC units, which include monitors, notebooks, tablets are expected to grow 10% this year, the strongest demand in tablet area.

我已概述我們對零售需求與供應鏈庫存的點估計。現在，為了便於各位規劃，我們也有一個下行情境：庫存（以平方英尺計）持平，而非增加 1 億。至於零售需求，我們也有多種情境，需求可能高於或低於 36 億平方英尺的點估計，顯然是由不同的經濟情境所驅動。就建模而言，我們目前預期今年 LCD 電視出貨量約為 2.3 億台，較 2011 年成長約 10%，並與多數產業預測一致。再次強調，我們預期面積成長會更高。PC 出貨量（包含螢幕、筆電、平板）預期今年成長 10%，其中平板的需求最為強勁。

With regards to glass capacity, we believe the actions we've taken to reduce capacity has brought glass supply closer to end demand. If we've correctly estimated retail demand and supply chain dynamics, then we believe worldwide glass supply could move into balance with glass demand at some point during the year. We will, of course, then decide on the pace and timing of bringing capacity back online, but we are likely to be very cautious about restarting tanks. This brings me to the topic of what happened in the fourth quarter.

就玻璃產能而言，我們認為我們為降低產能所採取的行動，已使玻璃供給更接近終端需求。如果我們對零售需求與供應鏈動態的估計正確，那麼我們認為全球玻璃供給可能在今年某個時點與玻璃需求達到平衡。當然，屆時我們將決定讓產能重新上線的速度與時點，但我們很可能會非常謹慎地重啟熔爐。這也帶到第四季發生的事情。

We believe there are a set of circumstances within the LCD industry factually leading to a reset of our LCD business. Circumstances have caused a period of more significant glass price declines. Glass price declines will be significant in the first quarter of 2012 as they were in quarter four. We expect significant double-digit price declines cumulative over the two quarter period of time. Now, the circumstance driving this are the following. First, as you know, the rate of growth at retail has been slowing for many years, as the technology penetration phase is ending for television. This growth slowdown into maturity has actually been expected by the industry for some time. However, while the growth rate was still in the low double digits this past year, this decline in maturity may have been hastened this past year by the worldwide economic malaise.

我們認為，LCD 產業內存在一系列客觀情勢，正導致我們的 LCD 業務進行重置。這些情勢造成玻璃價格出現更顯著的下跌期。2012 年第一季的玻璃價格下跌將會很顯著，正如第四季一樣。我們預期在這兩個季度期間累計將出現顯著的雙位數價格跌幅。推動此一情勢的因素如下。第一，如各位所知，多年來零售端的成長率一直在放緩，因為電視的技術滲透階段正在結束。產業其實早已預期這種由成長放緩走向成熟的趨勢。然而，儘管去年成長率仍在低雙位數，全球經濟低迷可能在去年加速了這種成熟化的下滑。

Second, the panel capacity has had a far more capacity than retail demand. This excess capacity leads to low operating utilization, continued price pressure on panels, and ultimately, terrible financial results including significant losses. This situation was aggravated in the back half of 2010 when the industry tried to fix its profitability by aiming high-feature and high-priced televisions to consumers. Consumers did not want the higher priced TVs, which led to lower growth and excess inventory. This is actually a good lesson learned to those who believe in high-priced OLEDs will be an immediate hit with consumers. Now, these issues exacerbated the utilization problem, putting further pressures on panel prices, and effectively pushing pricing to levels that were either at or lower than cash costs.

第二，面板產能遠高於零售需求。這種過剩產能導致低稼動率、面板價格持續承壓，最終造成糟糕的財務結果，包括重大虧損。2010 年下半年，產業試圖透過將高規格、高售價電視推向消費者來改善獲利能力，使得此情況更加惡化。消費者不想要更高價的電視，導致成長更低並出現過剩庫存。這其實也給那些相信高價 OLED 會立刻受到消費者青睞的人一個很好的教訓。如今，這些問題加劇了稼動率問題，進一步對面板價格造成壓力，並實質上將價格推到接近或低於現金成本的水準。

The third element is likely related to the first two. Display supply chain decided to reduce the amount of inventory carry. With the industry maturity and lack of profitability, this decision is very understandable. However, it caused lower utilization for panel makers and for glass makers. Glass industry has historically kept capacity closer to the retail level than the panel industry. This year, the inventory drawdown, combined with lower retail growth, pushed glass into a more significant over capacity situation. This circumstance, combined with panel industry profitability, has led to the pricing pressure on glass.

第三個因素很可能與前兩個因素相關。顯示器供應鏈決定降低庫存持有量。隨著產業成熟且獲利性不足，這項決策非常可以理解。然而，這導致面板廠與玻璃廠的產能利用率下降。歷史上，玻璃產業的產能通常比面板產業更貼近零售端水準。今年的去庫存，再加上零售成長放緩，使玻璃產業陷入更嚴重的產能過剩情況。在此情況下，再加上面板產業的獲利狀況，對玻璃價格造成了下行壓力。

So what does this mean for Corning? We have recognized this untenable financial situation in our customers; many posted record losses last year. We obviously have been working with them to reduce glass prices now to help their financial strains. We have proposed advancing our normal 2012 glass price declines versus more normal product price declines each quarter throughout the year. This will provide our customers more immediate financial relief. However, this cumulative two quarter of higher price declines will cause a reset of the profitability in our Display business. We're hopeful that our pricing actions, combined with capacity decisions, will lead us to get back to more stable price declines after quarter one. Display business continues to be extraordinarily profitable for us and will generate significant cash flow, even more so as the combination of our innovations and retail maturity cause our capital spending to slow in this segment.

那麼，這對康寧意味著什麼？我們已經注意到客戶面臨這種難以為繼的財務狀況；許多客戶去年出現創紀錄的虧損。顯然，我們一直在與他們合作，透過現在下調玻璃價格來緩解其財務壓力。我們已提議將原本2012年的玻璃降價幅度提前，相較於全年每季較為正常的產品價格下調節奏。這將為客戶提供更即時的財務紓困。然而，累計兩個季度較大幅度的降價，將使我們顯示事業的獲利水準重新調整。我們希望，我們的定價行動配合產能決策，能讓我們在第一季之後回到較為穩定的降價幅度。顯示事業對我們而言仍然極為獲利，並將產生可觀的現金流；尤其當我們的創新與零售端成熟度的結合，使我們在此事業的資本支出放緩時，更是如此。

The changes in the Display business often mask from investors the growth in sales and profits of our other segments. Other segments represent about 60% of the sales, and each of them had great sales growth in 2011. In fact, the sales of our non-display segments grew 31% in 2011; profits grew 136%. One of our fastest growing businesses is Telecom, where demand is forecasted to be strong worldwide in the key markets we play in; fiber-to-the-home, enterprise networks, optical fiber and wireless. We expect another year of very strong growth in Telecom; we expect further gross margin expansion in telecom driven by the mix of higher margin products. In the first quarter, sales will increase 5% to 10% sequentially, as well as year-over-year. In Environmental, we expect another very strong year of growth due primarily to our surging diesel business. First-quarter sales will be up slightly.

顯示事業的變動往往讓投資人忽略我們其他事業部門在銷售與獲利上的成長。其他事業約占銷售額的60%，且它們在2011年都取得了亮眼的銷售成長。事實上，我們非顯示事業的銷售在2011年成長31%；獲利成長136%。我們成長最快的業務之一是電信（Telecom）；我們所參與的關鍵市場——FTTH（光纖到府）、企業網路、光纖與無線——全球需求預期將維持強勁。我們預期電信業務將再迎來一年非常強勁的成長；並且在高毛利產品組合帶動下，電信毛利率可望進一步擴張。第一季銷售將較前一季成長5%至10%，且也將較去年同期成長。在環境事業（Environmental）方面，由於柴油相關業務快速成長，我們預期將再有一年非常強勁的成長。第一季銷售預期將小幅上升。

Specialty Materials sales will be led by Gorilla Glass. We anticipate the cover glass market could grow as much as 20% this year, driven primarily by tablets and handheld devices. However, we do expect further improvements in customer yields as the year progresses as well as some price declines. Right now it's hard to forecast the impact of each, and the impact they will have on 2012. The first quarter, we expect the segment sales to be up slightly, driven solely by Gorilla. In Life Sciences, we expect another strong year of sales growth through a combination of organic growth and a full year of sales from recent acquisitions. In first quarter, sales are expected to increase 10%. We will be providing more longer-term forecasts for each of these businesses next week at our investor meeting.

特殊材料（Specialty Materials）的銷售將由Gorilla Glass帶動。我們預期今年蓋板玻璃市場可能成長高達20%，主要由平板電腦與手持裝置帶動。不過，我們也預期隨著年度推進，客戶良率將進一步改善，同時也會出現一些價格下滑。目前很難預測兩者各自的影響，以及它們對2012年的影響程度。第一季我們預期該事業部門銷售將小幅上升，且完全由Gorilla帶動。在生命科學（Life Sciences）方面，我們預期將再有一年強勁的銷售成長，來自有機成長與近期併購帶來的全年銷售貢獻。第一季銷售預期將成長10%。我們將在下週的投資人會議上，提供這些業務更長期的展望預測。

At Dow Corning, we expect equity earnings to be lower in 2012. In the silicone business, it will be due to a combination of higher raw material costs and softer worldwide silicone demand impacting prices and margins. At Hemlock, we are anticipating the challenging price conditions in poly continue. Pricing is not expected to improve until supply demand levels return to balance and the current over capacity situation subsides. We will provide additional color on Dow Corning at the investor meeting next week.

在道康寧（Dow Corning）方面，我們預期2012年的權益法收益將較低。在矽膠（silicone）業務中，主要原因是原物料成本上升，加上全球矽膠需求轉弱，影響價格與利潤率。在Hemlock方面，我們預期多晶矽（poly）價格環境仍具挑戰。在供需回到平衡、目前的產能過剩情況緩解之前，價格預期不會改善。我們將在下週的投資人會議上，提供更多關於道康寧的補充說明。

Now, continuing on with our outlook for Q1, we expect gross margin to drop a percentage point, primarily due to lower pricing in display. SG&A, and R&D will be consistent on a dollar basis with the fourth quarter. Equity earnings, excluding special items, will be down between 5% to 20%, depending on that potential of lower volumes at SCP and the lower earnings at Dow Corning. Equity earnings from Dow Corning are expected to be down 35%, due primarily to lower poly pricing. Other income is expected to fall by more than half, primarily due to lower royalty income.

接著談第一季展望，我們預期毛利率將下降1個百分點，主要因顯示器業務價格走低。SG&A與研發費用在金額上將與第四季一致。不含特殊項目的權益法收益將下降5%至20%，取決於SCP可能出現的出貨量下滑，以及道康寧獲利降低。來自道康寧的權益法收益預期將下降35%，主要因多晶矽（poly）價格較低。其他收入預期將減少超過一半，主要因權利金收入下降。

Our tax rate, as expected, will move from 15% to 20% in the first quarter. The main drivers of the increase will be the expiration of certain tax holidays in Asia, a failure of Congress to pass [PEAK standards] bill and more profits in higher rate jurisdictions. As a reminder, this is a non-GAAP measure as it excludes special items. The share count will likely be lower as we have a full quarter's benefit from the share repurchases we did last quarter. For FX, as a reminder, our results move with changes in the yen to the US dollar exchange rate. The average rate in Q4 was JPY77, so if the yen averages one point higher or lower in Q1, estimate our sales and net income would decrease or increase by about $9 million.

如預期，我們的稅率在第一季將由15%上升至20%。上升的主要驅動因素包括：亞洲部分租稅優惠到期、國會未能通過[PEAK standards]法案，以及在較高稅率司法管轄區的獲利增加。提醒一下，這是非GAAP衡量，因為它排除了特殊項目。由於我們在上一季進行的庫藏股回購在本季將完整反映一整季效益，流通股數可能會更低。關於匯率（FX），提醒一下，我們的業績會隨日圓兌美元匯率變動而變化。第四季平均匯率為77日圓；因此若第一季日圓平均升值或貶值1日圓，我們估計銷售與淨利將分別減少或增加約900萬美元。

Now, before I move to Q&A, I want to remind everyone that our annual investor meeting will be next Friday, February 3, at Cipriani's in New York City. I can tell you, we're going to actually have a much different event than last year. This year we will actually be demonstrating live on stage many of our next-generation innovations that we're most excited about, obviously including Gorilla Glass 2, but as well, our ultra-thin glass. It's shaping up to be a very informative and actually hands-on event.

在進入問答之前，我想提醒各位，我們的年度投資人會議將於下週五、2月3日，在紐約市Cipriani's舉行。我可以告訴各位，今年的活動將與去年大不相同。今年我們將在舞台上現場展示許多我們最期待的下一代創新技術，當然包括Gorilla Glass 2，也包括我們的超薄玻璃。這將會是一場資訊量很高、而且實作體驗感很強的活動。

For those of you considering staying in your office or home and listening to the webcast, please don't. I highly encourage you to attend. Many of the demos can only be experienced live. Plus, this will be one of your rare opportunities to interact with all of our key business leaders in one setting. We hope you will attend. Ken?

對於正在考慮待在辦公室或家中收看網路直播的各位，請不要這麼做。我非常鼓勵各位親自出席。許多展示只有在現場才能體驗。此外，這也將是少數能在同一場合與我們所有關鍵事業領導團隊互動的機會之一。我們希望各位能出席。Ken？

Thank you, Jim. John, we're ready to take some calls now.

謝謝你，Jim。John，我們現在準備接聽一些來電。

Certainly.

當然。

(Operator Instructions)

(接線員指示)

Wamsi Mohan, BofA Merrill Lynch.

Wamsi Mohan，美國銀行美林（BofA Merrill Lynch）。

Jim, clearly you're communicating that the LCD business growth and profit profile is different. How should we think about the CapEx profile for LCD glass without any new capacity additions? And could you also talk about plans for the Beijing BOE related glass melting facility? Thanks.

Jim，很明顯你在傳達LCD業務的成長與獲利輪廓已經不同。在不新增任何產能的情況下，我們應該如何看待LCD玻璃的資本支出（CapEx）輪廓？另外，你也能談談與北京京東方（BOE）相關的玻璃熔融設施計畫嗎？謝謝。

So we are going to finish our Beijing facility, so you'll see that in capital spending. We believe our primary customer, the BOE will be a very successful panel maker as the Chinese market grows. We obviously are going to pace the startup of that factory and we will plan to do that. We're expecting to start up to occur in the second half. In terms of capital spending for Display, we are finishing up our earthquake preparedness capital spending, we've outlined to you before. But in terms of any additional capacity in Display, either in our wholly-owned or SCP you should not see us initiating anything new.

因此我們將完成我們的北京廠房，所以你會在資本支出中看到這一點。我們相信，隨著中國市場成長，我們的主要客戶 BOE 將會成為非常成功的面板製造商。我們顯然會掌握該工廠的啟動節奏，並且會據此規劃執行。我們預期將在下半年啟動。就顯示事業的資本支出而言，我們正在完成先前向各位說明過的耐震準備相關資本支出。但就顯示事業任何新增產能而言，不論是在我們全資擁有的產能或 SCP，你都不應該看到我們啟動任何新的投資。

Thanks, Jim. And I have a follow-up. Is there a level of price decline on the LCD glass quarter after quarter after which you would rather walk away from the incremental volumes?

謝謝你，Jim。我有一個追問。LCD 玻璃的價格一季接一季下滑到什麼程度時，你們會寧可放棄新增的出貨量？

I could just tell you, Wamsi, the LCD business remains extraordinarily profitable despite this two-quarter price declines we have and the incremental margins are very high. So we definitely intend to maintain our position in the business. And we'll obviously respond to situations as they come along. But beyond that, I won't speculate.

我只能告訴你，Wamsi，儘管我們已經歷兩個季度的價格下滑，LCD 業務仍然極其獲利，而且增量毛利非常高。所以我們確實打算維持我們在這項業務中的地位。而且我們顯然會視情況發展作出回應。但除此之外，我不作揣測。

Okay. Thanks, Jim. And if I could just squeeze one last one in here, you noted Gorilla Glass pricing could decline in 2012. Did it decline in 2011 and can you talk about some of the drivers or these competitive reasons, excess inventory or is it just incremental pressure from customers? Thank you.

好的。謝謝你，Jim。如果我可以再塞最後一個問題，你提到 Gorilla Glass 的價格在 2012 年可能會下滑。那 2011 年有下滑嗎？你能談談一些驅動因素嗎——例如競爭因素、庫存過剩，或只是客戶帶來的額外壓力？謝謝。

We really haven't seen much in the way of price changes in this business in its early years. We always expected that this would be the year we would begin to see some. It is not excessive price declines. I think some people are speculating that. That is not the case. In fact we haven't even reached agreement with all our customers yet.

在這項業務的早期幾年，我們其實沒有看到太多價格變動。我們一直預期今年會是開始看到一些變動的一年。這不是過度的價格下滑。我想有些人正在那樣揣測。但事實並非如此。實際上，我們甚至還沒有與所有客戶達成協議。

But we're just assuming that in the consumer electronics business that we will feel the fact that our customers always want to be lowering the price of their end-product. And so we are highlighting to you that this is the year we might see some price declines. We have not agreed yet with the most customers. We are not feeling any competitive pressure. And if the excitement that we heard from customers on Gorilla Glass 2 at Consumer Electronics Show continues, we don't expect to feel any competitive pressure.

但我們只是基於消費性電子產業的常態來假設：我們會感受到客戶總是希望降低其終端產品價格的事實。因此我們特別提醒各位，今年我們可能會看到一些價格下滑。我們尚未與大多數客戶達成協議。我們沒有感受到任何競爭壓力。而且如果我們在消費電子展上從客戶那裡聽到對 Gorilla Glass 2 的熱度持續下去，我們不預期會感受到任何競爭壓力。

Okay. Thanks, Jim.

好的。謝謝你，Jim。

Mark Sue, RBC Capital Markets.

RBC Capital Markets 的 Mark Sue。

Jim, you're doing the necessary things with pricing concessions in the near term, but how do we know that your actions don't create a change in future behaviors for your customers, creating a new priced tier and undoing some of the pricing strategy changes that you implemented three to four years ago?

Jim，你們在短期內做了必要的讓價措施，但我們怎麼知道你們的行動不會改變客戶未來的行為，形成新的價格層級，並且抵銷你們在三到四年前所推動的一些定價策略變革？

Well, I can never guarantee what the future is going to be, Mark. But I can tell you what we did coming out of 2006 is we adopted a strategy and communicated it very broadly that we thought the best thing for our customers and for the industry was to have consistent price declines every quarter, keeping up with the fact that consumer electronics prices are going down. And we intended to do that. There have been several times since then when we had price declines above that. But I would say in general, what has led to that strategy working for us in the industry was for the glass makers to not have capacity substantially above what the real demand was.

嗯，我永遠無法保證未來會怎麼發展，Mark。但我可以告訴你，我們在 2006 年之後採取了一項策略，並且非常廣泛地對外溝通：我們認為對客戶與產業最好的做法，是每一季都有一致的價格下滑，以反映消費性電子價格持續下降的事實。而我們也打算這麼做。自那之後有幾次，我們的價格下滑幅度高於該水準。但我會說，整體而言，讓這個策略在產業中對我們奏效的關鍵，是玻璃製造商的產能不要顯著高於實際需求。

The biggest problem that occurred this past year in my opinion -- take this as a Jim Flaws opinion, please -- is that the glass industry, which has to shoot ahead of the duck in terms of thinking about capacity, expected retail demand to grow in 2011 by a certain level. And then it didn't grow quite that strongly. I think ultimately, retail glass grew about 12%, and -- maybe a little bit more than that. But we had assumed originally that the retail demand would grow 18%, so we had capacity in place for that.

我認為去年發生的最大問題——請把這當作 Jim Flaws 的個人看法——是玻璃產業在思考產能時必須「打提前量」，原本預期 2011 年零售需求會以某個幅度成長。但後來成長沒有那麼強。我想最終零售玻璃需求大約成長了 12%，也許略高一些。但我們原先假設零售需求會成長 18%，所以我們為此配置了相應的產能。

Second, in our models, the prior four years, this would be 2010, '09, '08 and '07, the aggregate amount of square footage in the supply chain in any one of those years, either grew 100 million square feet at a minimum or over 200 million square feet. We had anticipated the industry would build inventory again. It didn't. Not only did not build, it actually declined. Those two things lead to over capacity in the glass industry by above 20%. That leaves the opportunity for our customers who are always putting price pressure on us to have a more effective way to do it when demand and supply imbalance for glass gets out of whack by that greater amount.

第二，在我們的模型中，前四年——也就是 2010、'09、'08 和 '07——供應鏈中任一年度的總平方英尺數，至少增加 1 億平方英尺，或甚至超過 2 億平方英尺。我們原本預期產業會再次建立庫存。但並沒有。不僅沒有建立，庫存實際上還下降了。這兩件事使玻璃產業的產能過剩超過 20%。當玻璃供需失衡擴大到那樣的程度時，就讓我們的客戶——他們總是對我們施加價格壓力——有更有效的方式來壓價。

What I believe -- Jim Flaws opinion -- what's going to happen is that we will not see the same precipitous drop in inventories going forward. Retail demand will grow, may not be as great as what we would all like, but we are going to be bringing the glass capacity in line closer to end demand and that becomes a recipe for more moderate price declines. I cannot guarantee you that. That's our strategy; that's why we announced the 25% capacity off line in the fourth quarter.

我相信——同樣是 Jim Flaws 的看法——未來我們不會再看到庫存以同樣陡峭的速度下滑。零售需求會成長，可能不如我們大家希望的那麼高，但我們會讓玻璃產能更貼近終端需求，這就形成了價格下滑更為溫和的條件。我無法向你保證。這是我們的策略；這也是為什麼我們宣布在第四季下線 25% 產能。

Hey, Jim, as we look toward stable able pricing declines after quarter one, is there a promise or maybe a gentlemen's agreement from your customers that once their margins improve, that subsequently there's more rational and less inclination for discounts from Corning?

嘿，Jim，當我們展望第一季之後較為穩定、可預期的價格下滑時，你們的客戶是否有任何承諾，或某種君子協定：一旦他們的利潤率改善，之後就會更理性、也較不傾向要求 Corning 提供折扣？

We have no promises or gentlemen's agreements with pricing with our customers.

我們與客戶之間在定價方面沒有任何承諾或君子協定。

Okay. Thanks and good luck, Jim.

好的。謝謝，祝你好運，Jim。

Rod Hall, JPMorgan.

JPMorgan 的 Rod Hall。

I just got two. One is on the pricing declines. If you could just elaborate Jim, on where we are in the process of renegotiating pricing among the panel makers for glass. We're halfway through that process, are we a quarter of the way through? Where are we in the process? Is there price levels resetting? Because that kind of thing likely is happening beginning in Q4? And then my second question is on inventory, could you just talk about -- you said, your central theme is for half a week of inventory compression this year. Do you expect that to be more toward the first half of the year or do you think that's going to be spread across the whole year? I'm kind of trying to get a feel for whether you think inventory stabilizes earlier in the year, or not until later this year? Thanks.

我有兩個問題。第一個是關於價格下滑。Jim，你能否再多說明一下，我們在與面板廠重新協商玻璃價格的進程中目前處於什麼階段？我們是完成了一半，還是只完成四分之一？目前進度到哪裡？價格水準是否正在重設？因為這類事情很可能從第四季開始發生？第二個問題是關於庫存：你提到你們今年的核心主題是庫存壓縮半週。你預期這會比較集中在上半年，還是會分散在全年？我想掌握的是，你是否認為庫存會在年初較早就穩定下來，還是要到今年稍晚才會？謝謝。

So I don't have a perspective on the half a week of inventory. We have done that saying, as that chart we showed, we believe over time, inventory efficiency will continue to improve. We haven't gotten so specific to say we know that's exactly occurring in which quarter. In terms of pricing, we're basically done on price agreements with our customers with the exception of the one customer in Korea, so we're very far along.

所以我對於半週的庫存沒有特別的看法。我們一直都有在做這件事；正如我們展示的那張圖表，我們相信隨著時間推移，庫存效率會持續改善。我們還沒有具體到能說我們知道這會在某一個季度確切發生。就定價而言，除了韓國的那一家客戶之外，我們基本上已經與客戶完成價格協議，所以進度已經非常靠前。

Okay. And, Jim, do you think that that one customer --you think you'll finish that in Q1, or do you have a feel for when that completes?

好的。那麼，Jim，關於那一家客戶——你覺得你們會在第一季完成嗎？或你對完成時間有什麼感覺？

I just won't speculate. It's obviously been a different very difficult situation and my ability to forecast how quickly we can do it has obviously been proven wrong, so I won't speculate anymore on them.

我不想臆測。那顯然是一個非常不同且非常困難的情況，而我對我們能多快完成的預測能力顯然已被證明是錯的，所以我不會再對他們做任何臆測。

Okay. All right. Thanks a lot.

好的。好吧。非常感謝。

Amir Rozwadowski, Barclays Capital.

Amir Rozwadowski，Barclays Capital。

Jim, in talking about that one Korean customer, obviously your guidance here has a decent amount of variability for shipments out of SCP dependent on a what happens with that customer. Can you give us a little bit of color as to what's on the flat side versus the down 10% side? Is it sort of a share recovery expectation on one side? Or is it that share would remain the same at sort of new levels with that customer?

Jim，談到那一家韓國客戶，顯然你們這裡的指引在SCP出貨量方面有相當程度的變動性，取決於那家客戶的情況會如何發展。你能否稍微補充一下，所謂持平的情境與下滑10%的情境各自代表什麼？其中一邊是對市占回升的預期嗎？還是說市占會維持在與該客戶目前的新水準大致相同？

I think I have to decline to be too specific on it. If this customer remains taking quite a bit of glass from SCP, they're just well below the original agreement that we had with them. And as you know, the dynamics that I walked through with you, unfortunately in November and December, is we thought we'd reached agreement with them, and then they took the share back up and took it back down, and so I think it's inappropriate for me to comment on the exact numbers in it. But depending on the outcome, because the quarter four had so much variability in the months of October, November, and December, there's a situation that we can see where the aggregate amount obviously is good, or it could get worse. And I just won't forecast it. That's why I wanted to give you a range there.

我想我必須婉拒在這件事上講得太具體。如果這位客戶仍然從SCP採購相當多的玻璃，他們只是遠低於我們原先與他們達成的協議水準。而如你所知，我在11月與12月不幸地跟你們說明過的那些動態是：我們以為已經與他們達成協議，然後他們又把份額拉上去、再拉下來，所以我認為我不適合評論其中的確切數字。但視結果而定，因為第四季在10月、11月與12月各月份的變動性很大，所以我們確實可能看到總量表現明顯不錯的情況，也可能變得更糟。我就是不會去預測它。這也是為什麼我想給你們一個區間。

Okay. That's helpful. And lastly on the pricing front, obviously you're working with the panel makers, given their challenged profitability here, are you still looking to maintain a premium in terms of pricing in the marketplace versus competitors dependent on sort of your pricing actions? I'm just trying to get a sense of in terms of what you're seeing for yourself and also your competitors in the market?

好的。這很有幫助。最後一個關於定價的問題：顯然你們正與面板廠合作，考量到他們目前獲利能力承壓，你們是否仍希望在市場定價上相對競爭對手維持溢價，取決於你們的定價動作？我只是想了解一下，你們自己以及你們看到的競爭對手在市場上的情況大概是什麼？

Sure. We expect to have a slight premium. As you know, the premium is fairly small. But we expect to get it. From our eyes, we expect to get the premium because we think our product performs best. On the other hand, from our competition size, they probably always want to be below us as a mechanism to try and do well with our customers. So we in general expect to always have a slight price premium versus our competition.

當然。我們預期會有些微的溢價。如你所知，這個溢價其實相當小。但我們預期能拿到。以我們的觀點，我們預期能拿到溢價，因為我們認為我們的產品表現最好。另一方面，從競爭對手的角度，他們大概總是希望價格低於我們，作為一種機制來嘗試在我們的客戶那裡做得更好。所以整體而言，我們預期相對競爭對手，我們會一直維持些微的價格溢價。

Thank you very much.

非常感謝。

Nikos Theodosopoulos, UBS.

Nikos Theodosopoulos，UBS。

Thank you. I had some hopefully some simple numeric questions and then a general question. Jim, I did not actually hear a CapEx outlook for 2012. Can you give us an expectation there?

謝謝。我有一些希望是簡單的數字問題，然後還有一個一般性問題。Jim，我其實沒有聽到你們對2012年的資本支出（CapEx）展望。你能給我們一個預期嗎？

Nikos, it's Ken. We gave it out a couple months ago. It's around $1.8 billion.

Nikos，我是Ken。我們在幾個月前已經提供過了。大約是18億美元。

Okay. So that didn't change? I guess that was my question. No change in that.

好的。所以那沒有改變？我想那就是我的問題。那方面沒有變化。

It did not change, no.

沒有改變，沒有。

Okay. And then the second question is, do you have for the full year of 2011, the LCD price declines in SCP and the wholly-consolidated business?

好的。第二個問題是，你們是否有2011年全年，SCP以及完全合併業務的LCD價格下跌幅度數據？

Nikos, for both SCP and the wholly-owned business, they were around 15%, maybe a little north of there for the full year 2011.

Nikos，SCP與全資業務兩者在2011年全年大約都是15%，可能略高於此。

Okay. And then my question here is when you idle capacity in LCD, can you elaborate what in fact that means? In other words, how long does it stay idle? What's the process -- more importantly, what's the duration to get it back when in fact you want to get it back? And as part of that question, is there any commitment Corning has made regarding the Beijing plant in terms of a completion date or minimum capacity there? Thank you.

好的。那我這裡的問題是，當你們讓LCD產能閒置時，能否說明那實際上代表什麼？換句話說，它會閒置多久？流程是什麼——更重要的是，當你們想要恢復時，把它重新拉回來需要多久？另外作為這個問題的一部分，Corning在北京工廠方面是否做出任何承諾，例如完工日期或最低產能？謝謝。

Lot of questions. So on Beijing, we do have a commitment to operate the factory. The pace of when it starts and how much it does in a given quarter is not a commitment, but obviously we have a very important customer there located right next to us. So we expect to supply glass to them from that facility. We are now forecasting the start up to be in the second half of 2012; we're actually shipping the customer from capacity in our other locations today, as they have begun their ramp-up of their gen 8.5.

問題很多。先談北京，我們確實有承諾要營運該工廠。至於何時啟動、以及在某一季度做多少，並不是承諾，但顯然我們在那裡有一位非常重要的客戶，就在我們旁邊。因此我們預期會從該廠供應玻璃給他們。我們目前預測將在2012年下半年啟動；實際上，因為他們已開始其8.5代線的爬坡，我們今天是用其他地點的產能在出貨給該客戶。

In terms of the overall capacity situation, I think as you know, we have smaller tanks than our competition, and a lot of them. And what we basically do when we talk about capacity going off-line, is we try to get -- unless we think we're going to need it again in a very short period of time, we let the tank go cold. The tank goes cold, we have a choice. Do we repair it immediately or do we delay the repair? And that will depend on our outlook. In general, we by and large, usually repair fairly quickly. You should think about the repair not being very expensive. It's just primarily rebuilding the refractory, swapping out the precious metals and putting in a new one and taking the old one to be reformed. Neither of -- that situation does not take a lot of time.

就整體產能狀況而言，我想如你所知，我們的熔爐（tank）比競爭對手小，而且數量很多。當我們談到產能下線時，我們基本上做的是——除非我們認為在很短時間內會再次需要它——我們會讓熔爐冷卻。熔爐冷卻後，我們有一個選擇：是立刻維修，還是延後維修？這將取決於我們的展望。一般而言，我們大多數情況下通常會相當快地進行維修。你可以把維修想成不是很昂貴。主要就是重建耐火材料、更換貴金屬部件，裝上新的，並把舊的送去再製。這些事情都不需要花很多時間。

And then once we decide to relight it, we have heat up the tank. You can't go from basically you know, the ambient air temperature to 2300 degrees instantaneously. It takes a while because you don't want everything to crack. So it takes a period of time to bring it up. But we can do that. It's not a significant issue in terms of timing. But I do want to emphasize -- what we have done is said, we've taken this capacity off line. We don't have plans to bring a lot of this capacity back, based on our outlook for the market. And we're intending to stick to that for now.

然後一旦我們決定重新點火，我們就必須把熔爐升溫。你不可能把它從基本上、你知道的，環境氣溫瞬間升到2300度。這需要一些時間，因為你不希望所有東西都裂開。所以需要一段時間把溫度拉上來。但我們可以做到。就時程而言，這不是一個重大的問題。但我確實想強調——我們所做的是說，我們已經把這些產能下線。基於我們對市場的展望，我們沒有計畫把其中很多產能再拉回來。而我們打算目前先維持這個做法。

Would there be a write-down if that capacity never got turned up? How would we measure with the potential write-down on something like that?

如果那個產能一直都沒有被啟用，是否會需要減記？像這樣的項目，潛在減記要如何衡量？

So if the capacity was never used again, ever, then yes, there could be a potential write-off. There are two write-offs that occur. If a tank has not finished its life, there's a small amount of capital that has to be written off, because once you take it cold, it's useless. You've seen that happen to us before, for example in quarter four of 2008. I think you're asking more about a longer-term issue, is if we never need some of this capacity again, yes, there would be a write-off.

所以如果那個產能從此再也不使用，那麼是的，可能會有潛在的沖銷。會發生兩種沖銷。如果某個熔爐（tank）尚未走完其使用壽命，就必須沖銷一小部分資本支出，因為一旦把它冷卻停爐，就無法再使用。你以前也看過我們發生過這種情況，例如 2008 年第四季。我想你問的比較是長期的問題：如果我們未來再也不需要部分產能，是的，就會有沖銷。

I can't estimate it for you because I don't know which tanks we would do. I will remind you that these tanks are very flexible tanks. Not only can we make LCD glass, we'll be able to make the OLED the glass. We can make Gorilla Glass, and we can make photovoltaic glass in these. So in terms of saying that there will be a write-off of this capacity, it will be permanently never needed ever again, I'm just not sure that that's an imminent decision that we're facing.

我無法替你估算，因為我不知道我們會針對哪些熔爐（tank）處理。我提醒你，這些熔爐非常有彈性。我們不僅能生產 LCD 玻璃，也能生產 OLED 玻璃。我們可以在這些熔爐中生產 Gorilla Glass，也可以生產光伏玻璃。因此，要說這些產能會被沖銷、而且是永久性地再也不需要，我不確定這是我們眼前正面臨的迫切決策。

Okay. Thank you.

好的。謝謝。

Steven Fox, Cross Research.

Steven Fox，Cross Research。

Just one question from me on the gross margin outlook. Jim, you're talking about gross margins being down about one full percentage point, but it's in the quarter where your wholly-owned business isn't growing, Gorilla Glass isn't growing and you have price pressures. I'm just trying to see why the margin shouldn't be down a little bit more. What else is going down within the gross margin line? Thanks.

我只有一個關於毛利率展望的問題。Jim，你提到毛利率大約下滑整整一個百分點，但那是在你全資業務沒有成長、Gorilla Glass 沒有成長、而且還有價格壓力的季度。我只是想了解，為什麼毛利率不會再多下滑一點。在毛利率這一行裡，還有哪些項目在下滑？謝謝。

It's Ken. At the corporate gross margin forecast clearly we do expect some good margin performance in our other segments during the quarter. And that's going to help offset some of the things you mentioned in your question in display.

我是 Ken。就公司整體毛利率預測而言，很明顯我們預期本季其他事業部門會有不錯的毛利表現。這將有助於抵銷你在問題中提到的顯示業務的一些因素。

In particular I draw your attention to Gorilla, where we had very low utilization in this quarter, where we were -- basically, we expect Gorilla demand to grow so we didn't turn the tanks off.

特別是請你注意 Gorilla，本季我們的稼動率非常低；我們——基本上，我們預期 Gorilla 的需求會成長，所以我們沒有把熔爐關掉。

Great. Thank you very much.

很好。非常感謝。

Thanks, Steve.

謝謝你，Steve。

Jim Suva, Citigroup.

Jim Suva，花旗集團。

Thank you very much. Can you quickly touch upon -- I believe the licensing agreement between SCP and Corning expired the end of last year. And maybe just by the end of 2011 and let us know what the outcome of that was? And then on the second note can you just kind of revisit one more time your commentary about the hope for improved pricing or more stable pricing in 2012? Because if we're thinking about the supply chain and connecting the dots at the panel makers, and also the OEMs are not profitable, I would assume that they're hoping for these panels or these glass prices to significantly continue to decline in the future. So what's the indications that's giving you that give you that hope?

非常感謝。你能否快速談一下——我相信 SCP 與康寧之間的授權協議在去年底到期。也許請你談談到 2011 年底為止的結果如何？第二點，能否再回顧一次你對 2012 年價格改善或更穩定價格的期待？因為如果我們從供應鏈角度、把面板廠以及 OEM 的情況串起來看，而他們也不獲利，我會假設他們希望這些面板或玻璃價格未來能持續大幅下跌。那麼，有哪些跡象讓你有這樣的期待？

Okay. On the former, on the Samsung agreement, as we talked about before, the Samsung agreement expired I think, at the end of November last year. Embedded in that is a step-down in the royalty rate. And we'll be talking some more about it at the IR day, so I'll ask you to hold until that day, because we do intend to address it then.

好的。先談前者，關於三星的協議，如同我們之前談過的，三星協議我想是在去年 11 月底到期。其中包含權利金費率的階梯式下調。我們會在投資人關係日（IR day）再多談一些，所以我請你先等到那一天，因為我們確實打算在那時候說明。

So what leads to our belief around the potential to get back to more moderate price declines? It is all based on the fact that we believe the industry is correcting to get glass capacity more in line with what will be the demand. And when that occurs, we believe there's an opportunity for more moderate price declines. That has been the primary strength of why we had moderate price declines during those periods over the last five years. It is very obvious from our customers perspective they would love to have price declines at this higher rate continue in perpetuity. And the tension is whether they have enough strength to force that upon the glassmaking industry or not. We believe that the capacity/balance situation in competitive dynamics will ultimately lead to more moderate price declines. And our hope is that occurs as soon as quarter two.

那麼，什麼讓我們相信價格下滑有機會回到較溫和的幅度？這完全基於我們相信產業正在修正，使玻璃產能更貼近需求。當這種情況發生時，我們認為價格下滑有機會變得更溫和。這一直是過去五年某些期間我們能維持溫和降價的主要原因。從客戶角度來看，很明顯他們希望這種較高幅度的降價能永遠持續。而關鍵的拉鋸在於：他們是否有足夠的力量把這件事強加在玻璃製造產業上。我們相信，在產能/供需平衡與競爭動態之下，最終會導向較溫和的價格下滑。我們希望最早在第二季就會發生。

Thank you. And we'll see you next Friday.

謝謝。那我們下週五見。

Looking forward to seeing you, Jim.

期待見到你，Jim。

George Notter, Jefferies.

George Notter，Jefferies。

I guess I was trying to better understand the relationship between price erosion on LCD TVs at retail and the size of the glass market. If I look back at 2011, it looks like pricing at retail came down around 6%. I think that was actually quite a bit below what you guys originally were thinking about coming into the year. And looking forward 2012, kind of feels like price erosion is going to be around the same place, 5% I think if you look at the DisplaySearch numbers. I think if you look at the glass market you guys are talking about 11% kind of growth this year in volume terms. How do you feel about how those two numbers correlate? Is it possible that you guys could be overestimating the growth in the market if you only get 5% price erosion on TVs at retail? Thanks.

我想更了解 LCD 電視零售端的價格侵蝕與玻璃市場規模之間的關係。如果我回看 2011 年，零售端價格似乎下滑約 6%。我認為那其實比你們年初原先預期的還要低不少。展望 2012 年，感覺價格侵蝕大概也在相近水準，若看 DisplaySearch 的數據大約是 5%。但看玻璃市場，你們談的是今年以出貨量計大約 11% 的成長。你們怎麼看這兩個數字之間的關聯？如果電視零售端只出現 5% 的價格侵蝕，你們是否可能高估了市場成長？謝謝。

So I don't think we actually agree with your TV pricing data down. I think we think it was higher than that 5%. And we have never seen an exact correlation between pricing in retail and our pricing to us. But we think we've got right the end market growth for televisions. Obviously, we do realize that even though consumer television is a fairly resistant purchase in tough times, there is the possibility of weakened economic fence.

所以我想我們其實不同意你提到的電視價格下滑數據。我們認為下滑幅度高於 5%。而且我們從未看到零售端定價與我們對客戶的定價之間存在精確的對應關係。但我們認為我們對電視終端市場的成長判斷是正確的。當然，我們也理解，即使消費者購買電視在景氣不佳時相對具有韌性，仍然存在經濟走弱的可能性。

If Europe goes into a serious recession, then maybe we could be wrong. But we think we've got it right. In fact, if anything, I think we got surprised a little bit on the upside in terms of units of television in the back half of this past year. So we remain comfortable with our estimate. Obviously, we could be wrong.

如果歐洲陷入嚴重衰退，那麼也許我們會判斷錯誤。但我們認為我們判斷是對的。事實上，如果要說的話，我認為去年下半年電視出貨量在上行方面還讓我們有點意外。所以我們仍對我們的估計感到放心。當然，我們也可能會錯。

Got it. Thanks.

了解。謝謝。

Simona Jankowski, Goldman Sachs.

Simona Jankowski，高盛。

Just wanted to clarify, Jim, some of the comments you made at the very beginning of your prepared remarks where you talked about approaching a bottom in profitability but not expecting the Display segment to grow. Was that a comment looking out beyond Q1? If you can just talk a little bit about your longer-term expectations in the Display segment. And also since you termed the margin decline this quarter as the reset, as opposed to a decline, that implies some level of permanence. And so just wanted to see if you can address how much of your gross margins you think you can recover beyond Q1 and also your thinking about offsetting some of that decline with the actions at the R&D and SG&A line?

我想釐清一下，Jim，你在一開始的事先準備發言中提到，獲利能力正在接近底部，但不預期顯示事業部會成長。那是針對第一季之後的看法嗎？你能否談談你對顯示事業部較長期的期待？另外，你把本季的毛利率下滑稱為「重置」而不是「下滑」，這暗示某種程度的永久性。因此也想請你說明，第一季之後你認為毛利率能回升多少，以及你對透過研發與銷售、一般及行政費用（SG&A）線上的措施來抵銷部分下滑的想法？

That was a lot of questions in one. So our comment about Display was a long-term comment. We think we're reaching the point where the unit growth and the volume growth, even with moderate price declines, will give us periods of time when there basically is no net sales growth for Display. This may have come a little earlier than what we expected. I think we have been expecting it may be, this occurring in 2014 or 2015 rather than 2012 and beyond. But basically, it appears that we may be at that point now. That was a longer-term comment, that wasn't a quarter-by-quarter comment. Your second question was?

這在一題裡問了很多問題。所以我們對 Display 的評論是偏長期的評論。我們認為我們正接近一個點：即使價格溫和下滑，單位成長與出貨量成長也會讓我們在某些期間內，Display 基本上不會有淨銷售成長。這可能比我們預期來得早一些。我想我們原本預期這可能會發生在 2014 或 2015 年，而不是 2012 年及之後。但基本上，看起來我們現在可能已經到那個點了。那是較長期的評論，不是逐季的評論。你的第二個問題是？

Yes. Just along the same lines when you talk about a reset in profitability, does that imply that you view your gross margin permanently coming down to a lower level even beyond the issues in Q1?

是的。同樣沿著這個思路，當你談到獲利能力的重置時，這是否意味著你認為毛利率會永久下滑到較低水準，即使不考慮第一季的那些問題？

So I would say with what we know today, we believe that the gross margin has come down in Display, and we don't see the set of factors that would drive it back up. To drive it back up, what would have to occur is that we would have to have a period of time where price declines were very, very minor and that we ran our tanks full and then cost reduction exceeded price declines. Right now, I can't -- in all candor, tell you that I see a set of conditions that will allow that to occur. That's what's leading us to say with this double quarter down of double-digit significant cumulative, we think we have driven the margin of Display down.

所以我會說，以我們今天所知道的情況，我們相信 Display 的毛利率已經下來了，而且我們看不到一組因素能把它再推回去。要把它推回去，必須出現一段期間，價格下跌非常、非常輕微，而且我們把產能跑滿，然後成本降低幅度超過價格下跌幅度。就目前而言，坦白說，我無法告訴你我看得到一組條件能讓那種情況發生。這也是為什麼我們會說，連續兩個季度的雙位數、顯著的累積下滑，我們認為已把 Display 的毛利率拉低了。

I will point out, it remains extraordinarily profitable. It's still our most probable business, but that's why we're calling it a reset. I'd love to have the situation outlined that occurred that we get to a few quarters of no price declines. If that happens, then I can reverse my comment.

我要指出的是，它仍然是極度有利可圖的。它仍然是我們最有利可圖的業務，但這就是我們稱之為重置的原因。我很希望能出現我剛才描述的情況，也就是有幾個季度沒有價格下跌。如果那真的發生，那我可以收回我的評論。

Yes. And then just the last part of that was, would you consider offsetting some of that with lower OpEx investments in the business given that the growth in margin profile there has changed?

是的。那最後一部分是，鑑於那裡的毛利成長輪廓已經改變，你們是否會考慮透過降低在該業務的 OpEx 投資來抵銷其中一部分？

Yes. In the Display business itself, you will see actions taken to reduce the OpEx.

是的。在 Display 業務本身，你會看到我們採取行動來降低 OpEx。

Okay. So the off margin impact you would think would be more muted but still some relative to the gross margin impact?

好的。所以你認為對營業利益率的影響會比較和緩，但相對於毛利率的影響仍會有一些？

I'll just comment, Simona, operating expense of this business is pretty tiny to start with. The moves that we can make in OpEx here are not going to overcome the gross margin declines from pricing.

我只想評論一下，Simona，這個業務的營業費用本來就相當小。我們在這裡能做的 OpEx 調整，無法抵消因定價造成的毛利率下滑。

Okay. Very clear. Thank you.

好的。非常清楚。謝謝。

Ehud Gelblum, Morgan Stanley.

Ehud Gelblum，摩根士丹利。

Couple things. From your study that you did with McKinsey, did they give a sense as to as you go forward, how low inventories can sustainably get by looking -- I'm sure they looked at other industries and where they went to. Could we be looking at eventually down the line and 10-, 11-, 12-week cycle? Or do you think it stays somewhere around 13,14?

幾件事。你們與麥肯錫做的研究中，他們是否對未來庫存能在可持續的情況下降到多低有一些看法——我相信他們看了其他產業以及它們降到什麼水準。我們最終是否可能看到 10、11、12 週的週期？還是你認為會維持在大約 13、14 週左右？

And then in negotiations with this major customer out of SCP, what are the points of negotiation? What can you actually work with them aside from price? Or is it really just hitting a price point and that's it? I understand there's still a premium to be had for the level of quality of glass that you have versus your competitors, but what else can you provide to them besides price? I'm just wondering -- or is it a matter of just who decides to finally give in?

另外，在與這個來自 SCP 的主要客戶談判時，談判的重點是什麼？除了價格之外，你們實際上還能跟他們談什麼？還是說真的就只是達到某個價格點，僅此而已？我理解你們的玻璃品質相較競爭對手仍有溢價空間，但除了價格之外，你們還能提供他們什麼？我只是想知道——還是說這其實就是看誰最後願意讓步？

And then the commentary on the significant price declines over the next two quarters or actually over Q4 and Q1 can you give us a sense as to significant double-digit decline? Can you bracket that? Is that 15% to 20%? 10% to 15%? 13% to 18%? Something that we can just make sure we're all sort of on the same page?

再來，你提到未來兩個季度、或其實是第四季與第一季會有顯著的價格下跌，你能否讓我們了解一下所謂顯著的雙位數下跌大概是什麼概念？你能給個區間嗎？是 15% 到 20%？10% 到 15%？13% 到 18%？給個數字讓我們確保大家大致在同一頁上？

So I'll go in reverse order. I'm not going to be more specific on the numbers. Cumulatively, it's a significant double-digit decline and we're not giving out a more specific number. Relative to the customer in Korea, the thing we can always offer is that we believe we are a extraordinarily reliable supplier. We believe our glass actually runs the best in their process, and those are the things that we would think would lead them to want us to have at some share level. And from their perspective, obviously price is probably the preeminent one. Beyond that, we hope to reach agreement with them and have them as a customer. And, your first question was?

那我就倒過來回答。我不會在數字上更具體。累計來看，這是顯著的雙位數下跌，我們不會提供更具體的數字。至於韓國的那位客戶，我們一直能提供的是：我們相信自己是極其可靠的供應商。我們相信我們的玻璃在他們的製程中表現其實是最好的，而這些是我們認為會讓他們希望我們維持一定市佔水準的原因。而從他們的角度來看，顯然價格可能是最首要的。除此之外，我們希望能與他們達成協議，並讓他們成為我們的客戶。那，你的第一個問題是？

Inventory, how low can it go?

庫存，能降到多低？

McKinsey said was over -- they can't forecast in perpetuity here, but they did say they believed over the next four years, that we could see going down a half a week per year. Obviously with the potential always that the economy is much different, that could change. So if you think over four years, that knocks another two weeks off.

麥肯錫的說法是——他們無法在這裡做永續的預測，但他們確實表示，他們相信在未來四年內，我們每年可能可以再下降半週。當然，經濟狀況可能大不相同，這也可能改變。所以如果你以四年來看，那就又能再少兩週。

That's helpful. I noticed you didn't mention the $10 billion revenue target that you have in the past. You also didn't mention the CapEx, though you said that was the same. But wondering if that $10 billion revenue target is still out there for you? And then finally you mentioned that there is an imbalance right now with too much glass out there. We know you're taking capacity out of the market; Asahi's taking a similar amount of capacity out of the market. That leaves only one player that doesn't seem to be doing that. If that one player doesn't actively take glass out of the market, do you think you can still get to a supply balance? Or would they constantly be acting as a spoiler?

這很有幫助。我注意到你沒有提到你們過去提出的 100 億美元營收目標。你也沒有提到資本支出（CapEx），雖然你說那是相同的。但我想問，那個 100 億美元的營收目標對你們來說仍然存在嗎？最後，你提到目前存在不平衡，市場上的玻璃供給過多。我們知道你們正在退出部分產能；旭硝子（Asahi）也在退出類似規模的產能。那就只剩下一家似乎沒有這麼做的業者。如果那家業者不主動退出玻璃產能，你認為仍然能達到供需平衡嗎？還是他們會一直扮演攪局者？

I'll have to let you talk to that competitor and see what their plans are in terms of running capacity or not building capacity. I'm just not going to comment on them. On the $10 billion, yes, I think the $10 billion is still possible. Obviously, Display will not be as strong as it was before. The flip side, Telecom is actually stronger than we originally expected. And Environmental is stronger than we expected, so I still think it's possible. We'll probably talk some more about that next week. The mix will probably be different. But we certainly haven't given up on the goal. We do need some help. I think everybody forgot one of the assumptions we said on getting on our way to $10 billion is we can't have a global economic malaise. If Europe goes into recession, then I get more worried.

你得去問那個競爭對手，看看他們在運轉產能或不擴建產能方面的計畫是什麼。我不打算評論他們。至於 100 億美元，是的，我認為 100 億美元仍然是可能的。顯然，Display 不會像以前那麼強。反過來，Telecom 其實比我們原先預期更強。Environmental 也比我們預期更強，所以我仍然認為有可能。我們可能會在下週再多談一些。組合可能會不同。但我們當然沒有放棄這個目標。我們確實需要一些外部助力。我想大家忘了我們在談到邁向 100 億美元時的一個假設：全球經濟不能陷入長期低迷。如果歐洲進入衰退，那我就會更擔心。

Let's hope it doesn't. Thanks so much.

希望不會。非常感謝。

John. It's Ken. I want to recognize that we're past the market opened, and be respectful of folks time. We will take one more call but for those who are in the queue, [Ann] and I will be in our offices right after the call. We can help answer your questions. John, we'll take one more caller.

John。我是 Ken。我想先說明，市場已經開盤了，我們也要尊重大家的時間。我們再接一通來電；但對於仍在等候隊列中的各位，[Ann] 和我會在電話會議結束後立刻回到辦公室。我們可以協助回答各位的問題。John，我們再接一位來電者。

Ajit Pai, Stifel Nicolaus.

Ajit Pai，Stifel Nicolaus。

Couple of quick questions. I think the first one is just to the same point on the pricing side, you talked about in the fourth quarter and the first quarter, working with your customers and trying to help them get to better profitability. Could you give us some indication as to the competitive dynamics and from a -- is some of the price reduction being driven by what your competitors are doing? Was it primarily customer driven? And then the second question is, you've talked about M&A and also bolstering your businesses outside of Display and potentially even Display. But could you give us some color as to whether in 2012 you can expect great activity there? I think you've highlighted Life Sciences and Telecom as the two focus areas, whether that's still the case or it's broader than that?

兩個簡短的問題。我想第一個問題還是回到定價面向的同一點：你們提到在第四季與第一季，與客戶合作並試圖協助他們提升獲利能力。能否請你們說明一下競爭態勢——從某種角度來看，部分降價是否是受到競爭對手行為所驅動？還是主要由客戶端所驅動？第二個問題是，你們談到併購（M&A），以及強化 Display 以外的業務，甚至可能也包括 Display。但能否請你們提供一些背景，說明 2012 年是否可以預期在這方面會有較多活動？我想你們先前強調生命科學與電信是兩個聚焦領域，這是否仍然如此，或是範圍比這更廣？

So in terms of M&A, you should expect greater activity in 2012 than 2011. The primary segments we're looking on remain Life Sciences and Telecom. But we definitely are moving to be more active. We're going to see more free cash flow and we think we can put it to work appropriately in M&A. In terms of the pricing dynamic, to be sure competitive price dynamics play into this also.

就併購而言，你們應該可以預期 2012 年的活動會比 2011 年更為積極。我們主要關注的領域仍是生命科學與電信。但我們確實正朝著更積極的方向推進。我們將看到更多自由現金流，我們認為可以把它適當地運用在併購上。至於定價動態，確實，競爭性的價格壓力也會影響這件事。

Obviously, that's driven a lot of what happened in Korea in Q3 and Q4. So I don't mean to imply that is just us being nice guys with our customers. Clearly the competition has something to do with this, too. But I think we clearly went to our customers acting to help them in this situation. In Korea obviously, we're feeling the competitive pressure. Ken?

顯然，這也是第三季與第四季在韓國所發生情況的重要驅動因素。所以我並不是要暗示這只是我們對客戶好心。很明顯，競爭也與此有關。但我認為我們確實是主動與客戶合作，協助他們度過這個情況。在韓國，我們顯然感受到競爭壓力。Ken？

Great. Jim, any closing comments?

很好。Jim，有沒有結語？

Just a couple. I think that I want to emphasize again overall the strength of Corning in this past year, we had a very great year. I mentioned the records and sales, gross margin and operating margin, eighth year in a row of free cash flow, raised the dividend and share repurchase. And the great performance in our businesses outside Display. I think that right now the conversation is obviously dominated by pricing in Display. We recognize this reset has occurred. But we definitely intend to get the Company at a new level of profitability, and then Wendell and I are committed to get the Company to grow off of that level, so we think that's going to happen.

就幾點。我想再次強調，Corning 在過去一年整體表現強勁，我們度過了非常出色的一年。我提到過我們在營收、毛利率與營業利益率方面創下紀錄，自由現金流連續第八年為正，提高了股利並進行庫藏股回購。以及我們在 Display 以外各項業務的優異表現。我認為目前的討論顯然被 Display 的定價所主導。我們認知到這次重置已經發生。但我們確實打算把公司帶到新的獲利水準，接著 Wendell 和我也承諾要在這個水準之上推動公司成長，所以我們認為這會發生。

Just one more reminder, obviously we'd love to see you in New York City. I promise you a very exciting event. Wendell is going to do some very creative work. And so we'd like to see you in person. And also, we of course will be presenting in February at the Goldman Sachs Technology and Internet Conference on February 14 and on February 28 at the Morgan Stanley Technology and Media Conference. Hope to see you there if not in New York. Ken?

再提醒一次，當然我們很希望在紐約市見到各位。我向各位保證那會是一場非常精彩的活動。Wendell 會做一些非常有創意的呈現。因此我們希望能與各位面對面見面。另外，我們當然也會在 2 月 14 日的高盛科技與網際網路研討會（Goldman Sachs Technology and Internet Conference），以及 2 月 28 日的摩根士丹利科技與媒體研討會（Morgan Stanley Technology and Media Conference）進行簡報。如果不能在紐約見到各位，也希望能在那裡見到各位。Ken？

Thank you, Jim, and thank you all for joining us this morning. A playback of this call will be available beginning at 10.30 AM Eastern time today. It's going to run until 5 PM Eastern time on Wednesday, February 8. To listen, dial 800-475-6701. The access code is 233477. Audiocast obviously is also available on the website during this time. And John, that concludes our call this morning. Please disconnect all lines.

謝謝你，Jim，也謝謝各位今天早上加入我們。本次電話會議的重播將於今天美東時間上午 10:30 開始提供。將持續至週三 2 月 8 日美東時間下午 5 點。收聽請撥打 800-475-6701。存取碼為 233477。在此期間，網站上當然也提供音訊網路直播（audiocast）。John，我們今天早上的電話會議到此結束。請切斷所有線路。