康寧 (GLW) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Corning's first-quarter conference call. As a reminder, this conference is being recorded.

各位女士、先生，感謝您稍候。歡迎參加康寧第一季財報電話會議。提醒您，本次會議將被錄音。

Now I'd like to introduce Ken Sofio, Vice President of Investor Relations. Please go ahead

現在我想介紹投資人關係副總裁 Ken Sofio。請開始。

Thank you. Good morning and welcome to Corning's first-quarter conference call. Jim Flaws, Vice Chairman and Chief Financial Officer, will start the call with some prepared remarks. Wendell Weeks, our Chairman and Chief Executive Officer, as well as Dr. Richard Eglen, Vice President and General Manager of Life Sciences, will join us for the Q&A.

謝謝。各位早安，歡迎參加康寧第一季財報電話會議。副董事長兼財務長 Jim Flaws 將以事先準備的發言開場。我們的董事長兼執行長 Wendell Weeks，以及生命科學事業部副總裁兼總經理 Richard Eglen 博士，將與我們一同參與問答環節。

Today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. They involve a number of risks, uncertainties and other factors that could cause actual results to differ materially. These risks are detailed in the Company's SEC reports. And now I'd like to turn the call over to Jim Flaws.

今天的發言包含前瞻性陳述，符合 1995 年《私人證券訴訟改革法案》的定義。其中涉及多項風險、不確定性及其他因素，可能導致實際結果出現重大差異。這些風險已在本公司向 SEC 提交的報告中詳述。現在我想把電話會議交給 Jim Flaws。

Thanks, Ken, good morning, everyone. Hopefully you had a chance to read the press release we issued this morning on our first-quarter 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一季業績新聞稿。若尚未閱讀，可在我們的投資人關係網站上找到副本。

I'd like to begin with our key messages this morning. Two months ago at our annual investor meeting, we announced we were facing a significant reset in the Company's profit levels. The reset was primarily due to significant price declines we are experiencing in our Display business over the fourth quarter of 2011 and the first quarter of 2012. We told you one of the most important objectives was to reduce the level of these very significant quarterly price declines. This morning, I'm very pleased to report we expect our glass price declines in the second quarter will be much more moderate than the average of the previous two quarters. In terms of glass shipments, Display volume was better than we expected in the first quarter. Volume at our wholly owned business was up in the mid-single digits sequentially versus our expectations of being flat. SCP volumes were down less than 10% sequentially which was also better than our guidance of down in the low-double digits.

我想先從今天早上的重點訊息開始。兩個月前在年度投資人會議上，我們宣布公司獲利水準正面臨顯著的重置。這次重置主要是因為我們的顯示器業務在 2011 年第四季與 2012 年第一季經歷了顯著的價格下滑。我們告訴各位，最重要的目標之一是降低這些非常顯著的季度價格跌幅。今天早上，我很高興報告，我們預期第二季玻璃價格跌幅將比前兩季平均水準溫和許多。就玻璃出貨而言，第一季顯示器出貨量優於我們預期。我們全資業務的出貨量較前一季成長中個位數百分比，而我們原先預期為持平。SCP 出貨量較前一季下滑不到 10%，也優於我們原先指引的低雙位數下滑。

We told you at our investor meeting that in addition to needing significant slowdown in glass price declines, we also needed to continue to grow our other businesses. I'm very pleased that in the first quarter, all of our other businesses grew sequentially. Specialty Materials sales were up 21%, lead by the stronger-than-expected demand for Gorilla glass. Sales in Environmental were up 12%, also more than anticipated.

我們在投資人會議上也提到，除了需要玻璃價格跌幅顯著放緩之外，我們也必須持續成長其他業務。我很高興第一季我們所有其他業務皆較前一季成長。特殊材料（Specialty Materials）銷售成長 21%，主要受 Gorilla Glass 需求強於預期所帶動。環境科技（Environmental）銷售成長 12%，也高於預期。

We also told you to reach our goal of $10 billion sales by 2014, we would supplement organic growth with acquisitions. Hopefully you saw our announcement to acquire a significant portion of Becton, Dickinson's Discovery Labware unit. This acquisition is expected to be completed later this year and is part of our strategy of becoming a bigger, more balanced Company. We're delighted with this pending transaction. Several years ago, we established a plan to grow our Life Sciences business to be a $1 billion business. We have grown organically and with the acquisitions of Axygen, Gosselin and Mediatech reached nearly $600 million last year. The pending purchase of BD's Discovery Labware unit will complement our existing portfolio and provide access to new customers. We believe this business will help catapult our Life Science segment towards its $1 billion goal by 2014. I will share some more details on this shortly.

我們也提到，為了在 2014 年達成 100 億美元營收目標，我們將以併購補充有機成長。希望各位已看到我們宣布收購 Becton, Dickinson 旗下 Discovery Labware 事業單位的重要部分。此項收購預計於今年稍晚完成，並且是我們成為規模更大、結構更均衡公司的策略之一。我們對這筆待完成的交易感到非常振奮。數年前，我們制定計畫，將生命科學業務成長為 10 億美元規模的事業。我們透過有機成長，以及收購 Axygen、Gosselin 與 Mediatech，去年已達到接近 6 億美元。此次擬收購 BD 的 Discovery Labware 事業單位，將補強我們既有產品組合並提供接觸新客戶的機會。我們相信這項業務將有助於推動生命科學事業部在 2014 年朝 10 億美元目標加速前進。我稍後會分享更多細節。

I do want to stress this transaction will not impact our ability to increase dividends or buy back additional shares. And we have the financial flexibility to pursue additional acquisition opportunities in both Life Sciences and Telecom. For those who have not had a chance to see our balance sheet yet, we ended the quarter with $6.8 billion in cash. In summary, we are pleased with our first quarter results and our progress against our key initiatives.

我也要強調，這筆交易不會影響我們提高股利或回購更多股份的能力。同時，我們在生命科學與電信兩個領域也具備追求更多併購機會的財務彈性。若各位尚未看到我們的資產負債表，本季末我們持有 68 億美元現金。總結而言，我們對第一季業績以及在關鍵倡議上的進展感到滿意。

So with that intro, I'll walk you through our Q1 results and our Q2 outlook. First quarter sales were $1.9 billion, up slightly sequentially and consistent with a year ago. Gross margin was 42.4% and lower than the fourth quarter as we had expected. Lower gross margin in Display offset improved gross margins in Environmental, Specialty Materials and Life Sciences. SG&A was lower on a dollar and a percentage of sales basis while R&D was slightly higher. Equity earnings of $218 million were down about 10% sequentially compared to equity earnings excluding special items of $241 million in quarter four. Now as a reminder, we had excluded a significant one-time gain that occurred at Dow Corning in Q4. Earnings per share excluding special items were $0.30, just slightly lower than Q4 but a material decline from a year ago. Both equity earnings and EPS as stated here are non-GAAP measures. You can find a reconciliation to GAAP on our website.

有了以上開場，我將帶各位回顧第一季結果與第二季展望。第一季銷售額為 19 億美元，較前一季小幅成長，並與去年同期一致。毛利率為 42.4%，如我們預期般低於第四季。顯示器業務毛利率下降，抵銷了環境科技、特殊材料與生命科學毛利率的改善。SG&A（銷售、一般及行政費用）以金額及占營收比率計皆下降，而研發費用則略為上升。權益法收益為 2.18 億美元，較前一季約下降 10%；相較之下，第四季扣除特殊項目的權益法收益為 2.41 億美元。提醒各位，我們在第四季排除了 Dow Corning 發生的一筆重大一次性收益。扣除特殊項目後的每股盈餘為 0.30 美元，僅略低於第四季，但較去年同期明顯下滑。此處所述的權益法收益與每股盈餘皆為非 GAAP 指標。您可在我們網站上找到與 GAAP 的調節表。

Now I'd like to start with Display. Display sales were $705 million in Q1, a decrease of 10% sequentially and versus last year. Volume was up in the mid-single digits exceeding our expectations. Price declines over Q4 and Q1 were in line with our expectations. Q1 results were negatively impacted by the weaker yen which averaged 79 for the quarter. Volume in SCP was down less than 10% sequentially, which is better than we had expected and the result of customer utilization rates strengthening in March. Equity earnings from SCP's LCD glass business were $182 million in Q1, a decrease of 5% from the fourth quarter. Now for your modeling purposes, SCP's first quarter LCD sales were about $730 million, a decline of 8% from the fourth quarter. As a reminder, this represents SCP's LCD sales only. Our public filings will report SCP's total sales to of course include CRT glass and other product sales.

接下來我想先談顯示器業務。第一季顯示器銷售額為 7.05 億美元，較前一季及去年同期皆下降 10%。出貨量成長中個位數百分比，超出我們預期。第四季與第一季的價格下滑幅度符合我們預期。第一季結果受到日圓走弱的不利影響，該季平均匯率為 79。SCP 的出貨量較前一季下滑不到 10%，優於我們預期，原因是 3 月客戶稼動率走強。第一季來自 SCP LCD 玻璃業務的權益法收益為 1.82 億美元，較第四季下降 5%。為便於各位建模，SCP 第一季 LCD 銷售額約為 7.30 億美元，較第四季下降 8%。提醒各位，這僅代表 SCP 的 LCD 銷售。我們的公開申報文件將揭露 SCP 的總銷售額，當然也會包含 CRT 玻璃及其他產品銷售。

Now I'd like to spend a few minutes discussing inventory levels in Display's supply chain, glass supply, demand and retail. We have revised our estimate of Q4 supply chain inventory now that we have the final data. We feel the Q4 number was 15.2 weeks and that the supply chain had actually reduced more inventory than we previously thought. Our preliminary estimate of inventory at the end of Q1 with approximately 15 weeks. We think this supply chain built a small amount of inventory in Q1. We will continue to monitor inventory levels, especially as we progress through the second quarter. Historically, the second quarter has been the most difficult time period for the supply chain because of the lower seasonal retail sales.

接下來我想花幾分鐘討論顯示器供應鏈的庫存水位、玻璃供給、需求與零售端情況。在取得最終數據後，我們已修正對第四季供應鏈庫存的估計。我們認為第四季庫存為 15.2 週，且供應鏈實際去化的庫存比我們先前認為的更多。我們對第一季末庫存的初步估計約為 15 週。我們認為供應鏈在第一季小幅增加了庫存。我們將持續監控庫存水位，特別是在進入第二季的過程中。歷史上，第二季因零售季節性銷售較低，通常是供應鏈最具挑戰的期間。

In terms of glass supply and demand, we believe both were in a relative balance entering the second quarter. Regarding our own capacity, we continue to evaluate our need to bring back glass capacity for both LCD and of course Gorilla glass. At this time, we consider our own glass inventory levels to be at the low end of what we would consider to be healthy. As a result, we'll likely take some measured steps to ensure we have adequate supply to meet demand.

就玻璃供給與需求而言，我們認為在進入第二季時兩者大致處於相對平衡。關於我們自身產能，我們持續評估是否需要恢復 LCD 以及當然也包括 Gorilla Glass 的玻璃產能。目前，我們認為自身玻璃庫存水位處於我們所認定健康水準的低端。因此，我們可能會採取一些審慎的措施，以確保有足夠供給來滿足需求。

Now turning to retail, we don't have a lot of new data. In the US, we're seeing growth rates that are a little higher than we had expected, this is likely driven by continued growth in larger screen TVs. However, in Europe demand is definitely weaker and likely a reflection of the economic uncertainty there. This is an area we're going to continue to monitor. As expected, year-over-year unit sales in Japan are down due to the tough year-over-year comparisons with the Echo Point promotions last year.

現在轉到零售端，我們沒有太多新的數據。在美國，我們看到的成長率略高於我們原先的預期，這很可能是由於大尺寸螢幕電視持續成長所帶動。然而，在歐洲，需求確實較弱，這可能反映了當地的經濟不確定性。這是我們將持續監測的領域。如預期所示，日本的年對年出貨量因去年 Echo Point 促銷活動造成的高基期比較而下滑。

In China there was an interesting dynamic this year with the Chinese New Year falling in January versus February, and therefore the promotional activity for the holiday actually started in December, leading be strong pull in of demand. You may recall in December units grew 45%. So had the lower demand in January, but we were pleased to see a strong growth rate return in February. We've aggregated the months of December, January and February to deal with the holidays changing and the blended unit growth rate in China was 15% up.

在中國，今年出現一個有趣的動態：農曆新年落在一月而非二月，因此節慶促銷活動其實在十二月就開始，導致需求明顯提前拉動。你可能還記得，十二月的出貨量成長了 45%。因此一月需求較低，但我們很高興看到二月強勁的成長率回升。我們將十二月、一月與二月加總，以因應假期時間變動的影響，而中國的合併出貨量成長率為上升 15%。

In terms of PC demand for the year, we have no change to our estimate of 4% unit growth excluding tablets. In terms of glass demand into retail, our estimate remains at the 3.6 billion square feet. As we mentioned on our January conference call, we have a variety of cases with retail demand being above or below that point estimate of 3.6 billion, driven primarily by different economic scenarios. Lastly in terms of our migration to EAGLE XG Slim, we continue to make excellent progress. We are well on our way to meeting our goal of more than half of our glass being shipped thin.

就全年 PC 需求而言，我們對於不含平板電腦的出貨量成長 4% 之估計維持不變。就零售端玻璃需求而言，我們的估計仍為 36 億平方英尺。如同我們在一月的電話會議中提到的，我們有多種情境，零售需求可能高於或低於 36 億平方英尺這個點估計，主要取決於不同的經濟情境。最後，關於我們向 EAGLE XG Slim 的轉移，我們持續取得極佳進展。我們正穩步朝向達成目標：出貨的玻璃中有超過一半為薄玻璃。

Now turning to Telecom. Sales were $508 million, up 4% sequentially but slightly below our expectations of being up 5% to 10%. This slight miss from expectations was due primarily to lower demand for cable products. Fiber to the home and optical fiber demand grew sequentially and while enterprise sales were consistent. Net income was $21 million, down from $26 million in Q4 and $41 million a year ago. Now compared to a year ago, the decrease in net income largely reflects weaker submarine cable sales and an increase in project spending to support fiber to the home and growth initiatives for NBN in Australia, China and India.

現在轉到電信業務。銷售額為 5.08 億美元，較前一季成長 4%，但略低於我們原先預期的成長 5% 至 10%。這次略低於預期主要是因為電纜產品需求較弱。光纖到府（FTTH）與光纖需求較前一季成長，而企業端銷售則維持一致。淨利為 2,100 萬美元，低於第四季的 2,600 萬美元，也低於去年同期的 4,100 萬美元。與去年同期相比，淨利下滑主要反映海底電纜銷售較弱，以及為支援光纖到府與澳洲、中國及印度 NBN 成長計畫而增加的專案支出。

Environmental sales were $263 million, up 12% sequentially, which was higher than our expectations. In addition to the normal seasonality increase in Q1, we saw additional growth. Strong auto demand in North America drove sales of gasoline substrates, and higher heavy-duty sales reflected manufacturing improvements during the quarter. Net income in Environmental jumped from $28 million in Q4 to $40 million in Q1.

環境事業銷售額為 2.63 億美元，較前一季成長 12%，高於我們的預期。除了第一季正常的季節性回升之外，我們也看到額外的成長。北美汽車需求強勁帶動汽油用載體（substrates）銷售，而重型車用產品銷售較高則反映本季製造改善。環境事業的淨利由第四季的 2,800 萬美元跳升至第一季的 4,000 萬美元。

In Specialty Materials, sales were $288 million, up 21% sequentially and much higher than we originally expected. This better than expected sales was due primarily to very strong demand for Gorilla glass. We saw a surge in demand in March which we believe was due to finishers preparing for the launch of new product models. Gross margin expanded significantly in the quarter and the segment posted net income of $21 million versus a net loss of $105 million in Q4. Now remember that loss in Q4 is primarily due to one-time charges.

在特殊材料事業方面，銷售額為 2.88 億美元，較前一季成長 21%，且遠高於我們原先預期。這項優於預期的銷售主要是由於 Gorilla Glass 需求非常強勁。我們在三月看到需求激增，我們認為這是由於後段加工廠（finishers）為新產品機型上市做準備所致。本季毛利率顯著擴張，該事業部門淨利為 2,100 萬美元，相較之下第四季為淨損 1.05 億美元。請記得，第四季的虧損主要是一次性費用所致。

In Life Sciences, Q1 sales were $155 million, up 8% sequentially and 8% above the year ago driven primarily by acquisitions. As I mentioned in my opening remarks, we have great expectations for our Life Sciences business. We have been and will continue to be innovators in Life Sciences. In fact, as a result of our innovative new business platform such as unique Cell Culture vessels and Novel Surfaces, business has grown organically at a faster rate than the overall industry in the past three years. It is an industry that remains very attractive to us. Life Science is very different from our Telecom and consumer electronic related businesses as it is more immune to economic recessions and has much less seasonality. In addition, the amount of new capital requires typically very low which is a nice divergence from our other very capital intensive businesses.

在生命科學事業方面，第一季銷售額為 1.55 億美元，較前一季成長 8%，且較去年同期高出 8%，主要由併購所帶動。如我在開場致詞中提到的，我們對生命科學事業抱持很高的期待。我們一直是、也將持續成為生命科學領域的創新者。事實上，受惠於我們創新的新商業平台，例如獨特的細胞培養容器與 Novel Surfaces，過去三年我們的有機成長速度快於整體產業。這個產業對我們而言仍然非常具吸引力。生命科學與我們的電信及消費性電子相關業務非常不同，因其較不受經濟衰退影響，且季節性也小得多。此外，通常所需新增資本支出非常低，這與我們其他資本密集型業務形成良好的差異。

Very excited about the pending purchase of BD's discovery Labware unit, this business is currently profitable and generates cash. They have an excellent long-standing reputation in the market. In fact, even those who do not follow Life Sciences industry have heard of Becton, Dickinson and their world-class products. We could not be more excited to welcome the Discovery Labware unit into the Corning family. We expect the transaction to close by the end of this year and be accretive by 2013 excluding the amortization of purchased intangibles. And looking ahead to 2016, which is the end of our planned integration time frame, we expect to reach $0.05 per share accretion also before the amortization of purchased intangibles. We estimated synergies will contribute about half the accretion through revenue expansion, SG&A reductions and manufacturing efficiency needs.

我們對即將收購 BD 的 Discovery Labware 事業部感到非常振奮；該業務目前具備獲利能力並能創造現金。他們在市場上擁有卓越且長久的聲譽。事實上，即使是不關注生命科學產業的人，也聽過 Becton, Dickinson 以及其世界級產品。我們非常期待歡迎 Discovery Labware 事業部加入康寧大家庭。我們預期該交易將於今年底前完成，並在不含已購無形資產攤銷的情況下，於 2013 年起具增益（accretive）。展望 2016 年（亦即我們規劃的整合期程結束時），我們預期每股可增加 0.05 美元的貢獻，同樣是在已購無形資產攤銷之前。我們估計協同效益將透過營收擴張、SG&A 降低以及製造效率提升，貢獻約一半的增益。

Let me quickly highlight the revenue expansion. If you recall this chart from our investor day in February, I've highlighted in blue text some key examples. First the BD unit brings complementary products we hope will add to our sales opportunities. Additionally, we have multiple revenue synergy opportunities in adjacency areas like biological coatings on Corning products, expanding our products like Epic and services into the ADME toxicology. For analyst who may not know what ADME toxicology is, Dr. Richard Eglen, Vice President and General Manager of Life Sciences, is actually on our call this morning, and he can answer any of your questions you have regarding the pending acquisition and the business.

我快速說明一下營收擴張的重點。如果你還記得我們二月投資人日的這張圖表，我已用藍色文字標示一些關鍵例子。首先，BD 事業部帶來互補性產品，我們希望能增加我們的銷售機會。此外，我們在相鄰領域也有多項營收協同機會，例如在康寧產品上提供生物塗層、將 Epic 等產品與服務擴展至 ADME 毒理領域。對於可能不清楚 ADME 毒理是什麼的分析師，生命科學事業副總裁兼總經理 Richard Eglen 博士今天早上也在線上，他可以回答你們關於這項待完成併購與該業務的任何問題。

Now turning to Dow Corning, equity earnings were $35 million, down 29% compared to the equity earnings [X specials] of $51 million in Q4. And as a reminder, we had excluded a large one-time gain in Q4. In the silicone business, Dow Corning did see good volume growth and much more moderate pricing pressure, which led to an increase in silicone sales. However, this is more than offset by the results at Hemlock. I'll have more commentary on Dow Corning and Hemlock in our outlook section.

現在轉到 Dow Corning，權益法收益為 3,500 萬美元，較第四季的權益法收益 [X specials] 5,100 萬美元下滑 29%。提醒一下，我們在第四季已排除一筆大型一次性收益。在矽利康（silicone）業務方面，Dow Corning 的確看到良好的銷量成長，且價格壓力溫和許多，帶動矽利康銷售增加。然而，這些表現被 Hemlock 的結果所抵銷且有餘。我會在展望部分對 Dow Corning 與 Hemlock 提供更多評論。

Now moving to the balance sheet, we ended the first quarter with $6.8 billion in cash and short-term investments up from $5.8 billion from the end of the year. The increase was primarily due to the $750 million debt issuances during the quarter. Biggest outflow in the quarter was cap spending a $412 million. Free cash flow was a positive $345 million, and a great start to the year as the Company often experiences an outflow in Q1.

接著看資產負債表，我們在第一季末的現金與短期投資為 68 億美元，高於年末的 58 億美元。增加主要來自本季發行 7.5 億美元的債務。本季最大的現金流出為資本支出 4.12 億美元。自由現金流為正 3.45 億美元，為全年帶來良好開局，因為公司在第一季通常會出現現金流出。

We also continued our share repurchase program during the first quarter, although the pace of repurchasing was much slower than the fourth quarter. Investors should not view our repurchasing pattern in Q1 as being less bullish or the Management to continue to believe the Company's current stock price is trading at a value that is lower than the long-term value of the Company. I'll not speculate on how fast we'll go through the remainder of the approved amount and what the Board will decide to do next. I can tell you that our given-- our current cash balance and cash flow expectations over the next several years, we expect to have ample financial flexibility to fund additional share repurchases, do M&A or to increase the dividend. Regarding the BD transaction of US cash, we have ample cash on hand domestically to pursue all [through].

我們在第一季也持續進行股票回購計畫，儘管回購步調較第四季慢得多。投資人不應將我們第一季的回購模式視為較不看多，或解讀為管理層不再相信公司目前股價低於公司長期價值。我不會臆測我們會以多快的速度用完剩餘核准額度，以及董事會接下來會決定採取什麼行動。我可以告訴各位，基於我們目前的現金餘額以及未來數年的現金流預期，我們預期將有充足的財務彈性來資助額外的股票回購、進行併購（M&A）或提高股利。關於BD交易的美國現金部分，我們在國內手上有充足現金可推進所有[through]。

So that completes my remarks on the first quarter. To summarize, I'd say we're very pleased with the first-quarter performance, especially in light of the headwinds we talked about just two short months ago.

以上就是我對第一季的說明。總結來說，我會說我們對第一季的表現非常滿意，尤其是考量到就在短短兩個月前我們談到的那些逆風。

Now I'll turn to the outlook and I'll start with Display. In the second quarter, volume at our wholly owned business should be consistent with the first quarter. And at SCP, volume should be up slightly sequentially. Our primary reason for these levels of expected volume is that TV demand in some areas of the world has been weak, and the supply chain has already built some inventory. As always we could be wrong, we're monitoring panel maker utilization closely. We do expect stronger pickup in glass demand in the second half assuming normal retail seasonality. Now for glass pricing, as I mentioned in the beginning, we expect our price declines to be much more moderate in Q2 compared to the significant declines that we experienced over Q4 and Q1. As a reminder, the pattern of price declines varied in those quarters, but all customers received significant price declines over that period.

接下來我會談展望，先從顯示事業開始。第二季，我們全資事業的出貨量應與第一季一致。而在SCP，出貨量應會較前一季小幅增加。我們之所以預期出貨量落在這些水準，主要原因是全球部分地區的電視需求疲弱，而供應鏈已經建立了一些庫存。一如往常，我們也可能判斷有誤；我們正密切監控面板廠的稼動率。在零售季節性正常的前提下，我們確實預期下半年玻璃需求會更強勁回升。至於玻璃價格，如我一開始提到的，我們預期第二季的降價幅度將比第四季與第一季所經歷的顯著降幅溫和得多。提醒一下，那兩季的降價節奏各有不同，但在那段期間所有客戶都獲得了顯著的降價。

Moving to Telecom, we expect sales to be up in the low to mid teens sequentially driven by growth across all product lines. Environmental, we expect sales to be consistent with the first quarter while we anticipate strong growth in heavy-duty filters, we're forecasting softer sales in the European market for light-duty filters for cars. Specialty Materials should have another strong quarter led by Gorilla glass. Sales are expected to be up 10% to 15% sequentially. And in Life Sciences, we expect sales to be up 5% to 10%. At Dow Corning we expect equity earnings to be up about 40% driven primarily by the higher volumes for both silicones and polysilicon.

轉到電信事業，我們預期銷售額將較前一季成長低到中十位數百分比，成長動能來自所有產品線。環境事業方面，我們預期銷售額與第一季一致；雖然我們預期重型濾清器將強勁成長，但我們預測歐洲市場的乘用車輕型濾清器銷售將較疲弱。特殊材料事業在Gorilla玻璃帶動下，應會再有一個強勁季度。預期銷售額將較前一季成長10%到15%。生命科學方面，我們預期銷售額將成長5%到10%。在Dow Corning，我們預期權益法收益將成長約40%，主要由矽膠與多晶矽的出貨量提升所帶動。

Now at Hemlock, we're anticipating the challenging price conditions in poly will continue. The global oversupply of poly combined with the decline in subsidies for two of the world's biggest markets for poly, Germany and Italy, continue to impact poly pricing and solar demand. We do not expect pricing to improve until supply demand levels return to balance and the current over capacity situation subsides.

至於Hemlock，我們預期多晶矽（poly）的艱困價格環境仍將持續。全球多晶矽供給過剩，加上全球兩個最大的多晶矽市場——德國與義大利——補貼下滑，持續影響多晶矽價格與太陽能需求。我們不預期價格會改善，直到供需水準回到平衡、目前的產能過剩情況緩解為止。

Now turning to the rest of our Q2 forecast, we expect gross margin to drop almost a percentage point. While we expect some margin expansion in Telecom and Specialty Materials, these will be offset by slightly lower margins in Environmental and Display. In Display, gross margin will be slightly lower even though price declines be much more moderate than previous quarters. From a modeling standpoint, typically takes higher amount of volume increase to offset even moderate price declines. The volume levels are not enough to hold gross margin this quarter. SG and R&D will be consistent as a percentage of sales in the second quarter. Equity earnings, excluding special items, will be up slightly sequentially. Our tax rate will remain around 20%.

接著談第二季其餘預測，我們預期毛利率將下滑接近1個百分點。雖然我們預期電信與特殊材料的毛利率會有所擴張，但將被環境與顯示事業略低的毛利率所抵銷。在顯示事業，即使降價幅度比前幾季溫和得多，毛利率仍會略低。從建模角度來看，通常需要更大幅度的出貨量增加，才能抵銷即便是溫和的降價。本季的出貨量水準不足以維持毛利率。第二季的銷管費（SG）與研發費（R&D）占銷售額比重將維持一致。不含特殊項目的權益法收益將較前一季小幅增加。我們的稅率將維持在約20%。

Now for FX, the yen has significantly weakened over the past few months. Fourth quarter, the yen to the US dollar exchange rate was 77, Q1 it was 79. The month of April it actually reached as high as 83, and today its bouncing between 81 and 82. As a reminder, our results move with the changes in the yen to US dollar exchange rate, weaker yen lowers our results, the stronger yen helps. So if the yen averages one point higher or lower in Q2, we estimate our sales and net income would decrease or increase by approximately $7 million. That concludes my opening remarks. Ken?

再談外匯（FX），日圓在過去幾個月明顯走弱。第四季日圓兌美元匯率為77，第一季為79。4月份一度高達83，而今天在81到82之間波動。提醒一下，我們的業績會隨日圓兌美元匯率變動而變化；日圓走弱會拉低我們的業績，日圓走強則有利。因此，如果第二季日圓平均匯率高或低1個點，我們估計銷售額與淨利將分別減少或增加約700萬美元。以上是我的開場說明。Ken？

Great, thank you Jim. Operator, we're ready to take some questions for Jim or Wendell or Richard.

很好，謝謝你Jim。接線員，我們準備好接受針對Jim、Wendell或Richard的提問。

Thank you. (Operator Instructions) Ehud Gelblum from Morgan Stanley.

謝謝。（接線員指示）Morgan Stanley的Ehud Gelblum。

Hi, guys, thank you, it's Ehud. First of all Jim, of course we know what ADME stands for, it's Absorption, Distribution, Metabolism and Excretion, so I think that's what it means at least.

嗨，各位，謝謝，我是Ehud。首先Jim，當然我們知道ADME代表什麼：吸收（Absorption）、分佈（Distribution）、代謝（Metabolism）與排泄（Excretion），所以我想至少它的意思是這個。

Now did you know that or did you Google it while I was--

那你是本來就知道，還是我在——的時候你去Google了？

I Googled it, are you kidding me, I of course I Googled it. A couple questions quickly. First of all, can you give us an update on the China tanks coming online and timing wise and progress there? And you previously had talked about having 25% of your capacity offline and spoke about one of your competitors having 35% of their capacity online and that helping create a supply/demand, a better supply/demand balance. Are you-- you made some comments that your own inventory of glass was low and so did I detect that you're bringing some of that 25% back online or are you letting the move to thin glass sort of add to your capacity, and so where do you see the offline amount of capacity a quarter or two out from there?

我Google了，你在開玩笑嗎？我當然是Google了。我快速問幾個問題。首先，你能否更新一下中國的熔爐（tanks）上線情況、時程與進度？你之前談到你們有25%的產能停線，也提到你們某個競爭對手有35%的產能上線，這有助於形成供需——更好的供需平衡。你——你提到你們自己的玻璃庫存偏低，所以我是否可以理解為你們正在把那25%中的一部分重新上線？還是你們讓轉向薄玻璃在某種程度上增加你們的產能？那麼你們認為在接下來一兩季，停線產能的比例會落在什麼水準？

So you're first question on China, we haven't had a change in the Display factory in Beijing. We expect the capacity to begin coming online in Q3. We're going to only bring up a portion of the factory, we're going to be very deliberate about how much capacity that adds. Obviously we're already shipping to our customer there from our facilities elsewhere. But we will start one tank there in the third quarter.

你第一個關於中國的問題，我們在北京的顯示工廠沒有變動。我們預期產能將在第三季開始上線。我們只會啟用工廠的一部分，我們會非常審慎地決定新增多少產能。顯然我們已經從其他地點的設施向那裡的客戶出貨。但我們會在第三季先啟動那裡的一座熔爐。

In terms of our own capacity, we're not giving out the new number. We have brought up some Gorilla tanks. We are being very careful about how much capacity we have online, it's less than 25%, but we are keeping it in balance with what we see as demand. It's our feeling that the glass industry overall is doing exactly the same. We see no wholesale charge to light up a ton of capacity by our competitors. And so that's why we continue to believe we're basically pretty much in line with supply and demand.

就我們自身產能而言，我們不會公布新的數字。我們已經啟用了一些Gorilla熔爐。我們非常謹慎地控制上線產能的規模，低於25%，但我們會讓它與我們所看到的需求保持平衡。我們認為整體玻璃產業也正做著完全相同的事。我們沒有看到競爭對手大規模地把大量產能全面點亮上線。因此這也是為什麼我們仍然相信，基本上供需大致相當一致。

Thanks. If I could just ask a follow up on the Korea customer that you had the issue with over the last several quarters, is that now settled and where do you stand with them with respect to they're clearly not down to zero but where do they stand with respect to what they're purchasing from SCP let's say three quarters ago and is that now stable going forward or do you anticipate more gyrations?

謝謝。如果我可以再追問一下，關於你們在過去幾季與某個韓國客戶之間的問題，現在是否已經解決？你們與他們目前的狀況如何——他們顯然不至於降到零——但就他們從SCP採購的量而言，相較於例如三季前，他們目前處於什麼水準？而且未來是否已經穩定，還是你們預期還會有更多波動？

So three quarters ago, if you're talking about the summer quarter, which would be Q3, we clearly are -- they are purchasing at a lower level, probably not too far off of what they did in Q3 which is when we lost the share originally. Compared to Q2, obviously it's a lot lower. But they are continuing to buy from us. We continue to talk to them, but as I indicated, I think actually your conference, we are not going to give very low prices to try and gain share back.

所以如果回推三個季度前、也就是你說的夏季季度（即第三季 Q3），很明顯我們——他們的採購量處於較低水準，可能與他們在 Q3 的採購量相差不遠；而那正是我們最初失去市占的時候。相較於第二季 Q2，顯然低很多。但他們仍持續向我們採購。我們也持續與他們溝通，但如我所指出的——我想其實是在你們這場會議上——我們不會為了把市占搶回來而給出非常低的價格。

Great, thank you.

很好，謝謝。

Mark Sue from RBC Capital Markets.

RBC Capital Markets 的 Mark Sue。

Thank you. Jim, maybe if we could get a sense of the quarterly sequence of price declines in Display glass. It was bad for two quarters, sounds as if it gets better as near term as the capacity is taken out of the system. Is this kind of the new norm going forward? Maybe some insights into how the negotiations for pricing proceeded and what indications that holds for pricing discussions over the longer term.

謝謝。Jim，也許我們可以了解一下顯示玻璃（Display glass）價格下滑在季度間的變化順序。前兩個季度很糟，聽起來隨著短期內產能退出系統，情況有所改善。這是否會成為未來的新常態？也請分享一些對定價談判如何進行的觀察，以及這對較長期的價格討論有何指標意義。

Well Mark, we had significant price declines in Q4 and Q1 at essentially all customers. They didn't happen exact same time at each customer, but in the end, all customers got significant price declines. When we went for Q2, we obviously wanted to try and get back to our much more moderate price decline pattern. And that's what we rolled out and we were delighted that we were able to achieve that. But we think a primary precursors to allowing that to happen is number one that capacity is more in line with demand. And number two, that demand at retail has been okay. So that has worked for Q2. We obviously haven't negotiated pricing for Q3. I think the thing for you to pay attention to is if retail demand flowing through to the panel makers is as we expect in Q3 and Q4, and the industry continues to balance its capacity utilization from a glass point of view, that would be very favorable for pricing. But obviously we are not giving guidance at this point in time for Q3.

Mark，我們在第四季 Q4 與第一季 Q1 幾乎對所有客戶都出現了顯著的價格下滑。各客戶發生的時間點不完全相同，但最終所有客戶都拿到了顯著的降價。到了第二季 Q2，我們當然希望能回到以往更為溫和的降價節奏。這就是我們提出並推動的方案，而我們也很高興能夠達成。但我們認為促成這件事的主要前提有兩點：第一，產能與需求更為匹配。第二，零售端需求表現尚可。因此第二季 Q2 得以奏效。我們顯然尚未就第三季 Q3 的價格完成談判。我認為你需要關注的是：若零售需求如我們預期在 Q3 與 Q4 持續傳導至面板廠，且從玻璃角度看產業持續維持產能利用率的平衡，那將非常有利於定價。但很明顯，我們目前不會對 Q3 提供指引。

Okay. And then Jim separately Gorilla glass seems to be reaccelerating, what's driving that? Is that broad-based adoption in terms of applications or is it a concentrated customer that's kind of lifting your outlook for Gorilla glass?

了解。另外，Jim，Gorilla Glass 似乎正在重新加速，背後的驅動因素是什麼？是各種應用的廣泛採用，還是某個集中型客戶在拉升你們對 Gorilla Glass 的展望？

So I would say that you know we had some disappointment in the third and fourth quarter on Gorilla where we would say in the end market for demand for smartphones and the mix of smartphones overall was quite strong as well as tablet sales were good, but that wasn't flowing through to us in quarter three and quarter four and now we feel like we're catching back up to that. The reason why we are think we were off of it was that we do know that some customers built inventory in the first half of 2011 when remember we were very tight on capacity, and then also their own yields have been improving over that period of time. So what we're hopeful of is that the demand that we saw in Q1 is more representative of us being in line with the real end market where smartphones and tablets continue to be doing quite well at retail and that's why we'll hope that that will continue in the second quarter.

我會這麼說：我們在 Gorilla 方面於第三季與第四季確實有些失望；我們會說終端市場對智慧型手機的需求以及整體智慧型手機的產品組合其實相當強勁，平板銷售也不錯，但在第三季與第四季並沒有反映到我們這邊，而現在我們覺得正在追趕回來。我們認為當時落後的原因是：我們知道有些客戶在 2011 年上半年建立了庫存——還記得那時我們產能非常吃緊——另外，他們自身的良率在那段期間也有所提升。因此我們希望第一季 Q1 看到的需求，更能代表我們已與真實終端市場同步；智慧型手機與平板在零售端仍表現良好，這也是我們希望第二季能延續的原因。

Okay, so more broad-based return?

好的，所以是更廣泛的回升？

Yes, so let me just add to that in that it is broad-based and we view that it is driving more in line with what is happening with the market. It's just important to note, this is a long supply chain. It's a complicated supply chain. We take glass, ship it to finishers, who cut it and [ion] exchange it, then they in turn ship it to a touch panel manufacturer. They in turn send it on to an ODM who then assembles the whole thing and then finally it goes to the brand whose the person that we sold to really originally. And each of these steps has different yields and different players have different yields, somewhere between 70% and 95% depending on the step and depending on the player.

是的，我再補充一下：確實是廣泛性的，我們認為這使我們的表現更貼近市場實際狀況。但要注意的是，這是一條很長的供應鏈。也是一條很複雜的供應鏈。我們把玻璃出貨給後段加工商，他們切割並進行 [ion] 交換處理，接著他們再出貨給觸控面板製造商。然後觸控面板廠再送到 ODM，由 ODM 組裝整套模組，最後才到品牌商——也就是我們最初真正銷售的對象。而每個環節的良率不同、不同業者的良率也不同，依步驟與業者而定，大約介於 70% 到 95% 之間。

And our market position is so strong in this, it means that classic supply chain variability, right, we're going to feel 100% of that. And as-- so that can mean just depending how the supply chain works, that our glass shipments in any given quarter can be different than the end market pull through. And that's what we experienced in the back half of last year. And now you see us sort of moving in line with the overall poll. And we're going to continue to have some fluctuation here not because of anything bad that's happening, but only because of the strength of our position and the length and excitement in this supply chain.

而我們在這個市場的地位非常強勢，這意味著典型的供應鏈波動性——對，我們會 100% 感受到。因此——也就是說，取決於供應鏈如何運作，我們在任何一個季度的玻璃出貨量都可能與終端市場的實際拉貨（pull-through）不同。這就是我們在去年下半年所經歷的情況。而現在你看到我們大致回到與整體拉貨同步的狀態。未來我們仍會有一些波動，並不是因為發生了什麼不好的事，而只是因為我們地位強勢，以及這條供應鏈的長度與其中的變動性。

That's helpful. Thank you, gentlemen.

這很有幫助。謝謝各位。

Nikos Theodosopoulos of UBS.

UBS 的 Nikos Theodosopoulos。

Yes, thank you. Couple of questions. I guess the first one is in the press release you mentioned that you think that the LCD revenues could show growth in the second half of the year. Even under a more moderate price decline environment, it would seem that in the third and fourth quarter, you would have to have roughly 15% kind of sequential increases in volume to achieve that. So I guess the question is, what gives you confidence that that would happen?

是的，謝謝。有幾個問題。我想第一個是：你們在新聞稿中提到，你們認為 LCD 營收在下半年可能會呈現成長。即使在較溫和的降價環境下，看起來在第三季與第四季，你們必須在出貨量上大約有 15% 的逐季增幅才能達成。所以我的問題是：是什麼讓你們有信心會發生這種情況？

And then so there's question number one. And then question number two, on Life Sciences, I guess maybe if I look at-- its an area I don't know that well for Corning. If I look at your other businesses, you have very high market share in leadership. And when I look at this business before you started acquiring companies, you were doing just slightly over $100 million a quarter, it didn't seem like a business you had material leadership. Can you give me an update on what you think your market share is in this business and what this -- why continue-- why the rationale in doing these acquisitions do you think you should become a material leader in that segment? Thank you.

以上是第一個問題。第二個問題關於生命科學（Life Sciences）：我想如果我看——這是我對康寧不太熟悉的領域。如果我看你們其他事業，你們通常都有很高的市占與領導地位。但我看這個事業在你們開始併購公司之前，每季營收略高於 1 億美元，看起來不像是你們具有實質領導地位的業務。你能否更新一下你們認為在這個業務的市占是多少？以及為什麼——為什麼要持續——持續進行這些併購的理由是什麼？你們為何認為自己應該成為該細分市場的實質領導者？謝謝。

So I'll start with Display. I think what we were trying to say at back half of the year is that the volume for-- available for glass makers from the flow-through of retail back to the panel makers would be substantially higher driven by the fact that the end market is seasonally stronger than. And what has happened to this industry over the last couple of years is that in fact, people don't have to build for televisions back in April for the Christmas season. They can do it much closer. So what we were talking about is strength in volume sequentially compared to the first half of the year. I'll let Wendell maybe open on Life Sciences why we find it attractive and then ask Richard to add a few more comments.

我先從顯示事業（Display）開始。我想我們在談下半年時想表達的是：由零售端回流到面板廠的傳導，將使玻璃製造商可供的量顯著提高，主要因為終端市場在季節性上會更強。而過去幾年這個產業發生的變化是：事實上，業者不必在四月就為了聖誕季的電視需求提前備貨生產。他們可以把生產時間拉得更接近旺季。因此我們所談的是：相較於上半年，下半年在量上會有逐季走強。至於生命科學，我先請 Wendell 說明我們為何覺得它具吸引力，然後再請 Richard 補充幾點。

To your point on leadership, it was exactly that that we identified as the opportunity, Nikos, is that we could bring to bear some of the same things that make us be a leader in our other segments and become a leader here, and leadership in two ways that matter. I think one is innovation where we've shown with our ability to grow organically at about twice the rate of the underlying market growth. And that has been solely due to our ability to bring more innovation to bear. And then also, with brands. And so what you see us doing on the acquisition front is augmenting our already strong brand in the Discovery Labware markets with additional brands like Falcon, which are quite strong. And then global expansion, which also plays to our strength because we already very strong as Corning in a lot of the markets that are going to be the real hyper growth areas for doing more Discovery work in the Life Sciences area, which is where our product strength lies.

關於你提到的領導力，Nikos，我們所辨識到的機會正是如此：我們可以把讓我們在其他事業領域成為領導者的某些相同要素帶到這裡，並在這裡也成為領導者，而且是在兩個重要面向上的領導力。我想第一個是創新，我們已經展現出有能力以約為整體市場基礎成長率兩倍的速度進行有機成長。而這完全歸功於我們能夠導入更多創新。另外還有品牌。因此，你看到我們在併購面向所做的，是在 Discovery Labware 市場中，以像 Falcon 這類相當強勢的額外品牌，來強化我們原本就很強的品牌。再來是全球擴張，這同樣符合我們的強項，因為以康寧而言，我們在許多將成為生命科學領域、進行更多 Discovery 工作的真正高速成長市場中，已經非常強勢，而那正是我們產品優勢所在。

Yes, I mean just a few words to add to that. I mean a good number to bear in mind is that the Life Sciences division of Corning has grown about 16% from 2006 to 2011, and that's the combination of the innovation that's been brought through as well as the strategic acquisitions, of which out of the proposed acquisition of the Discovery Labware business would be the fourth there. So as we've grown, as Wendell says and expanded our geographic reach, we can now move with a broad product portfolio offering into both the academic research market as well as the drug discovery market as well.

是的，我再補充幾句。一個值得記住的數字是，康寧的生命科學事業在 2006 到 2011 年間成長了約 16%，這是導入的創新以及策略性併購的綜合成果；而在這些併購中，這次擬議收購 Discovery Labware 業務將會是第四起。因此，隨著我們成長——如 Wendell 所說——並擴大我們的地理覆蓋範圍，我們現在可以以更廣泛的產品組合，同時切入學術研究市場以及藥物發現市場。

Amir Rozwadowski from Barclays Capital.

Barclays Capital 的 Amir Rozwadowski。

Jim I was wondering if we could talk a bit about some of the ASP decline that you've seen. I mean you've said that there has been a reset with respect to ASP declines obviously and with respect to margins on your Display business. With your commentary that you now expect to see sort of easing pricing declines going forward, should we now expect that that marginally that reset is behind us or are you still somewhat cautious going into some of the forward quarters to see some level of stabilization here?

Jim，我想請教一下我們是否可以談談你們所看到的一些 ASP 下滑。我的意思是，你們提到在顯示器業務方面，無論是 ASP 下滑或毛利，都顯然已經出現一次重置。依你們的說法，未來你們預期價格下滑會有所趨緩，那我們是否可以預期這個重置在邊際上已經過去了？還是你們對接下來幾個季度仍然有些謹慎，想觀察這裡是否會出現某種程度的穩定？

Well I would say we're hopeful that we've achieved back to the moderate level. If you go back over most of the last five years, majority of the quarters were this moderate price decline philosophy that we had brought out at the end of 2006. And we're hopeful that we have with what we've achieved in quarter two, and the conditions that we think are allow that, that we'll get back on that. I cannot guarantee you that that-- that we've achieved that in perpetuity, but what we have done is to try and have capacity be in line with the demand, and we think that allows for more moderate price declines. We achieved it in Q2, we're hopeful the same set of conditions will allow us to achieve it in the back half of the year. I can't make that guarantee yet.

我會說我們希望已經回到較為溫和的水準。如果你回顧過去五年大部分時間，多數季度都符合我們在 2006 年底提出的「溫和價格下滑」的理念。我們希望，憑藉第二季所達成的成果，以及我們認為促成這些成果的條件，我們能回到那樣的狀態。我無法向你保證——我們已經永遠達成那個狀態，但我們所做的是讓產能與需求保持一致，我們認為這有助於更溫和的價格下滑。我們在第二季做到了，也希望同樣的一組條件能讓我們在下半年做到。但我現在還不能做出保證。

Okay, that's helpful. And then if I think about sort of innovation on the LCD TV market, I mean a lot of us and investors have seen some of the developments on the OLED side at CES earlier this year. There's been a lot of talk also of possible new entrants into the TV market, perhaps bringing some of their innovation to bear from other tangential markets. I was wondering if you could give us an update on where he see sort of OLED development and it's impact for you folks and whether or not you are seeing potential new entrants that could help drive further either replacement sales or some level of increased innovation that gets people a bit more excited about replacing televisions here?

好的，這很有幫助。另外，如果我從 LCD 電視市場的創新來看，今年稍早在 CES 上，我想很多投資人都看到 OLED 方面的一些進展。也有很多討論提到可能會有新的業者進入電視市場，或許把他們在其他相鄰市場的創新帶進來。我想請你們更新一下你們如何看待 OLED 的發展及其對你們的影響；以及你們是否看到潛在的新進入者，可能進一步帶動汰換需求，或帶來某種程度的創新提升，讓消費者對汰換電視更有興趣？

It's a great question because as the LCD market has been going through the great challenges and sort of maturity that it has been, what our customer base has done is to invest very strongly in new innovations. I think OLED captures a lot of the headlines, but really it's part of a overall innovation trend around high-performance displays that are in the area of doing very high pixel count displays, as well as thinner, faster refresh and then OLED adds the opportunity of a little bit more dynamic color with the potential to go even thinner.

這是個很好的問題，因為在 LCD 市場經歷重大挑戰並逐漸成熟的過程中，我們的客戶群一直在非常積極地投資新創新。我想 OLED 吸引了很多媒體焦點，但它其實是整體高性能顯示器創新趨勢的一部分；這個趨勢包括更高像素數的顯示器，以及更薄、更快的刷新率，而 OLED 則帶來色彩更動態的機會，並有潛力做得更薄。

These higher performance displays put -- do two things that are helpful. First, the point you're making, which is higher performance displays encourage the market to trade up because it's more visible literally what it is you're looking at. And then the other is for our perspective, it puts way more challenges on the glass itself, because the way you get a higher pixel count styled display is by putting -- by making more complicated electronics packages, which put more stress on the glass which offer us the opportunity to innovate. So those I think the two positive forces.

這些更高性能的顯示器帶來——做了兩件有幫助的事。第一，就是你提到的：更高性能的顯示器會鼓勵市場往更高階產品升級，因為你所看到的差異在視覺上更明顯。第二，從我們的角度來看，它對玻璃本身提出更大的挑戰，因為要做出更高像素數的顯示器，就必須採用更複雜的電子封裝，這會對玻璃造成更大的應力，反而給了我們創新的機會。所以我認為這是兩股正向力量。

There's a lot of different technology nodes out there. And what we're doing out there is covering our bets across as you saw with the new OLED venture for glass was Samsung whose the leader in OLEDs. And as you see when you start to hear things like oxide TFTs, all of these new backplane technologies, we're also having a significant amount of effort and innovation in that space and alliances with the leaders in that space as well.

目前有很多不同的技術節點。而我們的作法是分散布局、覆蓋多種可能性；正如你所看到的，我們在玻璃方面的新 OLED 合作案是與 OLED 領導者三星合作。另外，當你開始聽到像氧化物 TFT 這些新背板技術時，我們也在那個領域投入大量努力與創新，並且同樣與該領域的領導者建立合作聯盟。

So overall, we look at the amount of innovation in LCD right now in our Display business to be really at a high. And you're not going to see it in television first, where everybody is focused is where the growth is at which is in the same area the Gorilla is at. So that's going to tend to be in mobile displays is where you're seeing the bulk of the focus. There is work going on on TVs and large size, but I think that's going to be a little bit later as opposed to sooner in terms of the size of its impact on the display technology landscape if that makes sense to you.

總體而言，我們認為目前在顯示器業務中，LCD 的創新程度其實處於高點。而你不會先在電視上看到，因為大家關注的焦點在成長所在之處，也就是 Gorilla 所在的同一個領域。因此，你會看到大部分的重點放在行動顯示器上。電視與大尺寸也有在進行相關工作，但就其對顯示技術版圖的影響規模而言，我認為會是稍晚而不是更早——如果這樣說你能理解的話。

That certainly is very helpful. And perhaps on the question around new potential entrants into the LCD TV market, have you folks been seeing any or can you even comment on that?

這確實非常有幫助。那麼，關於 LCD 電視市場可能出現的新進入者這個問題，你們是否有看到任何跡象，或你們是否能評論一下？

I cannot comment on the activities of any of our customers. It's for them to comment.

我無法評論任何我們客戶的活動。那應該由他們來評論。

Okay. Thank you very much for the incremental color.

好的。非常感謝你補充的說明。

Rod Hall from JPMorgan.

JPMorgan 的 Rod Hall。

Yes, thanks for taking my question. I guess I've got two. One is a little bit bigger picture question about the industry, the panel industry. So not profitable and marginally profitable, I guess that's the primary reason that pricing remains sort of volatile and uncertain in the future, and I just wonder if you guys could comment a little bit about what it is that repair that industry profitability? Is it only demand that we have to look forward to or is there-- are there other things that could happen and help these panel manufacturers get more profitable so there's not so much pressure on pricing? I guess that's my first question. Then just a quick housekeeping question for Jim. I didn't hear you mention the overall industry glass volume, (inaudible) glass volume for Q1 and I wonder if I just missed that or if you didn't mention, if you could talk about that a little bit? Thanks.

是的，謝謝讓我提問。我想我有兩個問題。第一個是比較宏觀、關於產業——面板產業——的問題。目前不獲利或僅微利，我想這是未來價格仍然相對波動且不確定的主要原因；我想請你們評論一下，什麼因素能修復這個產業的獲利能力？我們只能期待需求回升嗎？還是還有——是否還有其他可能發生的事情，能幫助這些面板製造商提高獲利，讓價格壓力不至於那麼大？這是我的第一個問題。第二個是給 Jim 的一個簡單例行問題。我沒有聽到你提到整體產業玻璃出貨量，（聽不清）第一季的玻璃出貨量；我想確認是我漏聽了，還是你沒有提到。如果你能談一下那部分會很有幫助。謝謝。

So we didn't give out the glass volume for Q1, we've been-- we stopped giving out that level of detail about the supply chain. In terms of the panel industry, I'll start and ask Wendell to jump in. I think what we have seen over the past quarter is stabilization and slight pricing increases in panel prices. And as Wendell was talking about, we've seen the industry I think slowing their capacity additions or actually in some cases stopping them. And we see them focused on products that could bring them higher revenue off of that capital as Wendell was talking about with some of the high-performance displays. Wendell, anything you'd like to add on the industry?

所以我們沒有公布第一季的玻璃出貨量，我們已經——我們停止提供供應鏈層級的那種細節。就面板產業而言，我先說，然後請 Wendell 補充。我認為我們在過去一季看到的是面板價格趨於穩定，並且略有上漲。而且如同 Wendell 提到的，我們看到產業在放緩產能擴增，甚至在某些情況下停止擴增。同時我們也看到他們把重點放在能讓其資本帶來更高營收的產品上，正如 Wendell 所說的一些高效能顯示器。Wendell，你還想對產業補充什麼嗎？

First, I think you're on a really excellent question. In that the display industry, our customer base are quite challenged financially. And I think there's three things that they're doing to try to address that. First is getting an industry structure where you see a sweeping set of moves by a bunch of different players as they either emphasize or deemphasize their investments in the space and consolidation. That basically is [aimed] at demand versus supply balance and that's where Jim is addressing. And the best proxy for that usually one way or the other is what's happening with panel prices. And non of us would over react to the latest sort of relative stability in panel price. I think we just got to look at this going forward and see how that plays out.

首先，我覺得你的問題非常好。顯示器產業方面，我們的客戶群在財務上確實面臨相當大的挑戰。我認為他們正在做三件事來嘗試因應。第一，是形成一種產業結構：你會看到許多不同玩家採取一連串大動作，或加碼、或減碼在這個領域的投資，以及進行整併。這基本上是為了讓需求與供給達到平衡，而這也是 Jim 正在談的重點。而通常衡量這件事最好的替代指標，不管怎麼看，就是面板價格的變化。我們任何人都不會對最近面板價格相對穩定就過度反應。我認為我們必須往前看，觀察後續如何發展。

Second, is what's leading to their challenges is first the market wasn't as big as everybody was expecting. And second, there's a lack of strong differentiation in the product sets. That's where you see the emphasis on innovation for high performance displays, which by the way people talk about OLEDs, note, oxide TFT technology, which is a new backplane technology, is revolutionizing what LCDs can do. It is making them faster refresh rate, much higher pixel count, it's way more dynamic displays, so it is far from over on which displays are going to win in which segment. But you see that strong focus on differentiation. And we'll see how that plays out in the technology nodes in one area or the other.

第二，造成他們挑戰的原因，第一是市場規模沒有大家原先預期的那麼大。第二是產品組合缺乏強而有力的差異化。因此你會看到他們強調高效能顯示器的創新；順帶一提，大家在談 OLED 的同時也要注意，氧化物 TFT 技術（這是一種新的背板技術）正在徹底改變 LCD 的能力。它讓 LCD 具備更快的更新率、更高的像素數，以及更動態的顯示效果，所以在不同區隔究竟哪種顯示技術會勝出，遠遠還沒定論。但你確實看到他們非常聚焦在差異化。而我們也會看看這在不同技術節點、不同領域會如何發展。

And then finally, you see the focus on those areas in the market that are growing the strongest. And their profitability pools are more aimed at these smaller mobile areas and that's why you see the emphasis towards that space. So I think those are the three things that the customer base is working its way through. And we'll have to see how it all plays out. Clearly, the best and most important thing that can happen in the near term is for the market, the end market to perform in line with our expectations and theirs and that'll certainly help create the type of environment that's a little more stable.

最後，你會看到他們把重點放在市場中成長最強勁的領域。他們的獲利池更偏向這些較小型的行動裝置領域，這也是你看到他們朝那個方向著力的原因。所以我認為客戶群正在消化與推進的就是這三件事。而我們也必須看看最終會如何發展。很明顯，短期內最好、也最重要的事情，就是終端市場的表現能符合我們與他們的預期，這肯定有助於形成更穩定一些的環境。

Okay, thanks guys.

好的，謝謝各位。

Jim Suva from Citi.

花旗的 Jim Suva。

Thank you very much for your details. I'd like to ask that your commentary about more moderate pricing, is that something kind of in a range of 3% to 4% as I noticed the Company did not say like historical ranges, which have traditionally been down closer to 2%? Or for differently, is the future pricing now slightly more aggressive or am I just being too sensitive on the wording as I think you know, I'm a sensitive guy?

非常感謝你們提供的細節。我想問一下，你們提到價格走勢較為溫和，這是否大概落在 3% 到 4% 的區間？因為我注意到公司沒有提到像過去那樣的歷史區間，而傳統上通常更接近下滑 2%。或者換個方式問，未來的定價是否變得稍微更積極？還是我只是對措辭太敏感了——你們也知道，我是個敏感的人？

We think all our analysts are sensitive. Don't read too much into the wording. I will tell you that the price declines are significantly down from what we experienced in Q4 and Q1. And I'm not going to give out an exact number for competitive reasons, but you'd be very pleased with the reduction in the price declines that we've had, particularly because you're a sensitive guy.

我們認為所有分析師都很敏感。不要對措辭過度解讀。我可以告訴你的是，價格下滑幅度相較於我們在第四季與第一季所經歷的，已經明顯收斂。基於競爭因素我不會提供確切數字，但你會對我們價格下滑幅度的縮小感到非常滿意，尤其因為你是個敏感的人。

Thanks for that. Take you back to your original plan I believe it was in the 2007 time period or something where you implemented this new pricing discipline nature of disciplined pricing, does that take you back to that type of level or I guess what I'm trying to get at is, are we back to that original plan of pricing or is something just slightly more aggressive?

謝謝你這麼說。回到你們最初的計畫，我記得大概是在 2007 年左右，你們導入了這種新的定價紀律、也就是更有紀律的定價方式；這是否代表你們回到那種水準？或者我想問的是，我們是否回到當初那個定價計畫，還是現在的作法稍微更積極一些？

I'm sorry Jim, I'm not going to give you an exact number for competitive reasons.

抱歉 Jim，基於競爭因素，我不會給你一個確切數字。

Okay, okay, well maybe I can ask a different question. On the gross margin, I think I heard you mention that will be down about one point, if that's correct, does that imply that you think maybe Q2 will be the bottom for your gross margins? Or will something such as ramping China impact that going forward? And I don't know if when you ramp China are you just layering in that additional supply slowly or will you be taking off production elsewhere and the impact of gross margins?

好，好，那也許我換個問題。關於毛利率，我想我聽到你提到大概會下滑 1 個百分點；如果我理解正確，這是否意味著你認為第二季可能是毛利率的低點？或者像中國產能爬坡這類因素，會在之後造成影響？另外我也不確定，你們在中國爬坡時，是只是慢慢疊加新增供給，還是會在其他地方減產？以及這對毛利率的影響？

In terms of our gross margin, in terms of China, we will balance all of our production against what we think the market needs. So, if China came up and we didn't need it, we need to light one tank there, we would cut back elsewhere. But we actually think that in quarters three, which is when China would start, in quarter four that the glass demand will be higher if we're right about the normal seasonal uptick at retail and the fact that the supply chain doesn't appear to be building excess inventories. So you should-- based on what we think, you shouldn't expect China to be a drag on profitability of Display.

就我們的毛利率而言，關於中國，我們會依據我們認為市場需要的量來平衡所有產能。所以，如果中國產能上來了但我們不需要——我們只需要點亮那邊的一座熔爐——那我們就會在其他地方回調。但我們其實認為在第三季（也就是中國開始的時點）以及第四季，如果我們對零售端正常的季節性回升判斷正確，而且供應鏈看起來並沒有在建立過多庫存，那麼玻璃需求會更高。所以——基於我們的判斷，你不應該預期中國會拖累顯示事業的獲利能力。

In terms of our gross margin as to whether Q2 is the lowest, it all depends on what we see in Q3 and Q4. If we're-- our hopes turn out that we're back on a path of moderate price declines, and we see volume grow at a greater rate in Q3, that will improve display gross margins and that will improve our corporate average gross margin.

至於我們的毛利率，第二季是否是最低點，完全取決於我們在第三季與第四季看到的情況。如果我們——我們的期待成真，也就是回到溫和的價格下滑路徑，並且在第三季看到出貨量以更高的速度成長，那將改善顯示事業的毛利率，也會改善我們公司整體的平均毛利率。

Thank you very much.

非常感謝。

Simona Jankowski from Goldman Sachs.

高盛的 Simona Jankowski。

Hi, thanks, it's Simona Jankowski here. Just a couple of clarifications on your Display business and a couple of questions. Just wanted to clarify first in terms of the upside you saw in the quarter on your volumes, was that better demand that you saw or was there some better share gains for you at some of your customers particularly as you caught them up on some of the pricing? And than the other clarification I had was on the competitive situation at your career customer, looking at that now, do you feel that that was really kind of unique and contained to that one customer or is there anything that would lead you to believe that there could be similar type of situations, maybe not to that same magnitude arising at other customers? And then I have a couple of quick questions.

嗨，謝謝，我是 Simona Jankowski。我想就你們的顯示事業做幾點釐清並問幾個問題。首先想釐清的是，本季你們出貨量的上行，是因為你們看到需求更好，還是因為你們在部分客戶那邊取得了更好的市占提升，特別是在你們把某些定價調整到位之後？另外一個釐清是關於你們在韓國那家客戶的競爭情況；以目前來看，你們是否覺得那其實是相當獨特、且侷限於那一家客戶的事件？還是有任何跡象讓你們認為，其他客戶也可能出現類似情況——也許規模不會那麼大？然後我還有幾個快速問題。

So the upside was better utilization by various customers, that's what was the improvement. As to our characterization of what happened in Korea in Q3 and Q4, we regard that as a very unique situation and not something that we are really experiencing elsewhere.

所以這次的上行主要是來自多家客戶的產能利用率提高，這就是改善的原因。至於我們對第三季與第四季在韓國所發生事情的描述，我們認為那是非常獨特的情況，並不是我們在其他地方真正正在經歷的狀況。

Okay, that is helpful. And then just a couple of quick questions, is one you didn't mention anything on the Olympics and I guess we've all been kind of burnt with that in the past, but if you can just give us some sense of what you're expecting or seeing in the supply chain ahead of that, if anything? And then lastly, what impact, if any, do you see from the change there at Sharp in terms of Hon Hai purchase of an equity stake in their 10g plant?

好的，這很有幫助。接著幾個快速問題：第一個是你們沒有提到奧運；我想我們過去在這方面都曾經被「燒到」過，但如果可以的話，請你們給我們一些你們對奧運前供應鏈的預期或觀察（如果有的話）。最後，夏普那邊的變動——也就是鴻海買入其 10 代線工廠的股權——你們認為這會帶來什麼影響（如果有的話）？

Well I'll take the Olympics and let Wendell take Hon Hai. So we're not hearing the same buzz about the Olympics as we heard before the China one. And as you know, generally our philosophy is that sporting events create a minor uptick, it's usually less than what people's expectations is. So we're actually quite pleased that people aren't getting over hyped about this. But we really are not hearing the buzz like we saw in 2008 before the Olympics in China. Wendell, you like to comment on Sharp and Hon Hai?

那我就談奧運，讓Wendell來談鴻海。所以我們沒有聽到像之前中國那次奧運前那樣的同等熱度。而且如你所知，我們一貫的看法是，體育賽事只會帶來小幅拉動，通常低於人們的預期。所以我們其實很高興大家沒有過度炒作。但我們確實沒有聽到像2008年中國奧運前那樣的熱度。Wendell，你要不要評論一下夏普和鴻海？

Well first I like to take a little piece of the Olympics one and then I'll move right into Hon Hai, which is actually, we were hoping that my daughter who is a track athlete was going to make the Olympic trials this year. So I can guaranteed you there was going to be a huge upsurge in television purchases here in the upstate New York region. However, she injured her ankle so now I don't know.

我先就奧運這題補充一小段，然後我會直接切入鴻海。其實，我們原本希望我女兒（她是田徑選手）今年能進奧運選拔賽。所以我可以向你保證，紐約州上州地區的電視採購一定會大幅增加。不過，她腳踝受傷了，所以現在我也不確定了。

Don't like to hear that.

不太想聽到這個。

Yes, anyway, I digress. The Hon Hai Sharp play. So-- well let's contain ourselves to the publicly disclosed information from Foxconn, Hon Hai, Terry Gou basically and Sharp because I just have to, okay? In their rationale for the transaction, what it really comes down to is Sharp is an absolute leader in display technology. They're the people that we did all the original work with LCDs, it is true. And they are a leader, earlier in the call you heard me talking about oxide TFT and the revolution going on for LCD, Sharp is an absolute leader in oxide TFT, especially very large size oxide TFT. So they have that strength.

是的，總之我扯遠了。回到鴻海—夏普這個案子。那麼——我們就把討論限制在富士康、鴻海、郭台銘基本上以及夏普已公開揭露的資訊，因為我必須這麼做，好嗎？就交易的理由而言，歸根結底是：夏普在顯示技術上是絕對的領導者。他們是我們當初在LCD上做所有原始合作工作的夥伴，這是真的。而且他們也是領導者——你稍早聽我提到氧化物TFT以及LCD正在發生的革命，夏普在氧化物TFT方面是絕對領先，尤其是在超大尺寸氧化物TFT。所以他們有這個強項。

Terry Gou says I have enormous market access, but I am missing the relevant technology to be able to take my market access and turn it into volume and panel plans that I have an ownership interest in. Hence for the merger here or Terry Gou's investment in Sharp and in Sakai-city and the logic is he will take his market access, fill up Sakai-city and be able to take this new technology as well as some of the existing technology and be able to greatly enhance the position of the non- Korean panel manufacturing industry. So that is the stated logic of the transaction. If that is indeed how it plays out, given our position in Sakai-city, that would be a very favorable outcome for us.

郭台銘說：我有龐大的市場通路，但我缺少相關技術，無法把我的市場通路轉化為我持有股權的面板廠的產量與面板計畫。因此才有這次合併，或說郭台銘對夏普與堺市的投資；其邏輯是他會利用他的市場通路把堺市的產能填滿，並能取得這項新技術以及部分既有技術，從而大幅提升非韓系面板製造產業的競爭地位。這就是交易所宣稱的邏輯。如果事情確實如此發展，考量我們在堺市的布局，這對我們會是非常有利的結果。

Right, so in that scenario you would expect utilization to rise and indirectly you'd gain share in that situation?

了解，所以在那種情境下，你會預期稼動率上升，而你也會在那種情況下間接受益、提高市占嗎？

In that situation, if that is the way indeed that it plays out. It's early days, so sometimes industrial logic of transactions doesn't carry it's way all the way through to reality. Sometimes it does and it's better, it's just a little early for us to be able to call it definitively.

在那種情況下，如果事情確實如其所述那樣發展。但現在還太早，因為有時候交易的產業邏輯不一定能一路落實到現實。有時候會，而且結果會更好；只是現在對我們來說還有點早，無法下定論。

Great, thank you very much.

很好，非常感謝。

Carter Shoop from KeyBanc.

接下來是KeyBanc的Carter Shoop。

Good morning, thanks for taking my questions. First question, assuming you increase inventory levels at the wholly owned Display division in 2Q, can you comment on the magnitude of that increase?

早安，謝謝讓我提問。第一個問題，假設你們在第二季於全資的顯示事業部提高庫存水位，能否評論一下增加的幅度？

It would not be significant, such that you would notice the impact in our results.

幅度不會顯著，不至於讓你在我們的業績結果中看出影響。

Okay, that's helpful. And then in response to a question by a particularly sensitive analyst you mentioned that China won't be a drag to gross margins in the third quarter when that comes online, are you suggesting it's not going to be a net decline in gross margins or are you saying that the increase won't impact at all because I know when we brought on the Gen 10 facility obviously a much larger facility, I think it was about 2.5 points, a 2.5 point drive to corporate gross margins in the June '09 quarter, so you don't expect any drag there whatsoever, is that accurate?

好的，這很有幫助。另外，回應一位特別敏感的分析師的問題時，你提到中國那邊第三季上線時不會拖累毛利率；你的意思是說毛利率不會淨下降，還是說增加的產能完全不會造成影響？因為我知道當年我們導入第10代廠時，顯然那是更大的廠，我記得在2009年6月那一季，對公司整體毛利率大概有2.5個百分點的拖累，所以你不預期會有任何拖累、完全不會，是這樣嗎？

My comment was I do not expect a drag on Display margins in Q3 from the start up of a tank in China. Going back to the Sakai-city, it was a very large facility and remember both the Display business and Corning Incorporated were much smaller then. But definitely I don't expect to see a drag from China based on what I know today with how we're going to face the start up.

我的意思是：我不預期第三季因中國一座熔爐（tank）啟動而對顯示事業的毛利率造成拖累。回到堺市，那是一座非常大的廠，而且請記得當時顯示事業以及康寧公司本身的規模都小得多。但就我今天所掌握、以及我們將如何面對啟動作業的資訊來看，我確實不預期會看到來自中國的拖累。

Great, and then just two housekeeping questions, if I may. Did you say what the Gorilla glass sales were in the quarter? If so, I missed that, and if you didn't, could you provide that?

很好，另外我再問兩個例行性問題，如果可以的話。你們有提到本季Gorilla Glass的銷售額是多少嗎？如果有的話我可能漏聽了；如果沒有，能否提供？

Did not and we are not providing it.

沒有，而且我們不會提供。

Okay And then on the acquisition, the BD acquisition, when you say it's going to be slightly accretive in 2013, what type of financing are you assuming in that calculation? Is that a whack or is that using cash financing?

好的。那再問關於收購案、BD收購案：你說2013年會略為增厚（accretive），你在那個計算中假設的是哪種融資方式？是用股票，還是用現金融資？

We're doing it all with our cash which we earn nothing on.

我們全部用現金支付，而這些現金放著也賺不到什麼。

Okay, thank you very much.

好的，非常感謝。

George Notter from Jefferies.

接下來是Jefferies的George Notter。

Hi, thanks very much. I guess if I look back on pricing, historically you had these catch up scenarios play out where Corning for periods of time has experienced more moderate rates of price erosion and then we found four or five quarters down the line that you've kind of been out of whack a bit relative to your competitors and you've had this catch up period where your pricings come down more aggressively. Do you think that scenario could play out here going forward? I guess in other words I'm wondering if you see everyone kind of behaving like you guys in terms of price erosion for the next few quarters?

嗨，非常感謝。我回頭看定價歷史，過去你們曾出現過這種「追趕」情境：康寧在一段時間內經歷較溫和的價格侵蝕，然後在往後四、五個季度我們發現你們相對競爭對手有點偏離，接著出現一段追趕期，你們的價格下調得更積極。你覺得未來這種情況可能在這裡再次發生嗎？換句話說，我想知道你是否看到接下來幾季大家在價格侵蝕方面都會像你們一樣行事？

Well I would say clearly our hope is that we are getting back to moderate price declines for ourselves, and we're hopeful that that's what the entire industry is going to do. And it'd be pure speculation for me to say how long that would last. I mean our hope is that it continues for a long period of time.

我會說，我們當然希望我們自己的價格下滑能回到溫和的幅度，也希望整個產業都會這麼做。至於能維持多久，我若回答就純屬推測。我們的希望是它能持續很長一段時間。

Got it and then just--

了解，然後再——

Just one other point because your lead in on the logic flow, I just want to touch on which is usually us relative to our competition, yes we indeed get a premium. That premium has that sort of couple 3% range of premium that within that, we can maintain our share position at a given customer above that pressures increase. So it's not so much that our-- we're not deliberately trying to expand that premium, and that our competitors are dropping lower than us. Usually what leads to this sort of disconnect and more catch up is when market demand is very different than glass supply and our competition moves more aggressively on price in a given quarter and then we are usually more restrained in our reaction, and that's what tends to open up the gap. Just want to make sure logic flow, we're all seeing it the same way.

再補充一點，因為你剛才的鋪陳提到邏輯脈絡，我想順便說明：通常是我們相對於競爭對手，沒錯，我們確實能拿到溢價。那個溢價大概在2%到3%的區間；在這個區間內，我們可以在特定客戶維持市占位置，超過這個區間壓力就會增加。所以並不是說我們——我們並非刻意要擴大這個溢價，而是競爭對手比我們降得更低。通常導致這種脫節、以及後續更明顯追趕的原因，是市場需求與玻璃供給落差很大時，競爭對手在某一季更積極降價，而我們通常反應較為克制，這就容易把差距拉開。我只是想確認一下邏輯脈絡，確保大家看法一致。

Got it, okay, that's very helpful. And then just switching gears real quickly, any new perspectives on capital spending relative to what you guys were talking about at the analyst day, I think $1.8 billion this year and $1.2 billion to $1.3 billion for next?

了解，好的，這非常有幫助。然後很快換個話題，關於資本支出，相較於你們在分析師日談到的內容，有沒有新的看法？我記得你們說今年是18億美元，明年是12億到13億美元？

No change there. We still expect a decline in 2013, so you should count on those numbers.

那方面沒有變化。我們仍預期2013年會下滑，所以你應該以那些數字為準。

Thanks.

謝謝。

And Operator, it's Ken, I recognize we're coming up on the market open I want to be respectful of people's time, so we'll take one more call.

接線員，我是Ken。我知道快到開盤了，我想尊重大家的時間，所以我們再接最後一通來電。

Wamsi Mohan of Bank of America.

美國銀行的Wamsi Mohan。

Yes, thanks a lot, good morning. Can you give us maybe some indication of concentration now in Gorilla glass versus where you were a year ago? There were a lot more devices that were being launched, new devices, seems like a lot of them have really not met with market success. And it's being concentrated with a few key players, but really have shown success. So I'm trying to understand if we should expect significant volatility in this business outside of the supply chain issues that Wendell alluded to earlier? And what risk if any do you see from any substitution of alternative materials? And I have a follow up.

是的，非常感謝，早安。你們能否提供一些指標，說明目前Gorilla Glass的集中度相較於一年前如何？當時有更多裝置推出、新裝置上市，但看起來其中很多並未在市場上成功。而現在似乎集中在少數幾個關鍵玩家身上，而且他們確實展現了成功。所以我想了解，除了Wendell先前提到的供應鏈問題之外，我們是否應該預期這項業務會有顯著的波動？另外，對於以替代材料取代的風險（若有）你們怎麼看？我還有一個追問。

So I'll comment on concentration. I think that in smartphones, we're seeing demand by a number of players. The things that you referred to last year really were the launch of the early tablets by some people who didn't do that well. But we're seeing broad-based demand in smartphones for Gorilla. Wendell do you want to comment on competition?

我先談談集中度。我認為在智慧型手機方面，我們看到多家業者的需求。你提到去年那些情況，主要是一些業者推出早期平板，但表現不佳。不過我們在智慧型手機上看到對Gorilla的廣泛需求。Wendell，你要談談競爭嗎？

Yes. So competition continues to be about the same as it was last year, which is there has been competition throughout last year. There is competition now. We've been blessed with continuing to have our very strong position. The change between Gorilla glass one and Gorilla glass two sort of reestablished an advantage again enabling customers to go about 20% thinner and have the same strength. And so following our classic model, which is do a combination of product leading innovation together with strong process work to develop competitive cost advantage, that typical model for us continues to work right now in Gorilla. And hopefully more innovation to come, so watch this space.

好的。競爭情況大致與去年相同，也就是去年整年都有競爭。現在也有競爭。我們很幸運能持續維持非常強勢的地位。從Gorilla Glass 1到Gorilla Glass 2的變化，某種程度上再次建立了優勢，讓客戶能做到約20%更薄、但維持相同強度。因此依循我們一貫的模式，也就是以產品領先的創新結合強健的製程工作，來建立具競爭力的成本優勢；這個典型模式目前在Gorilla上仍然奏效。也希望後續會有更多創新，敬請期待。

Okay, thanks, Wendell. And as my follow up here, you mentioned oxide TFT several times today. So I'm curious to get your opinion on the possibility of the use of lower quality alkali glass as one of the two sheets of glass if oxide does become the backplane technology of choice? Thank you.

好的，謝謝你，Wendell。我的追問是，你們今天多次提到氧化物TFT。所以我想請教你對於這種可能性的看法：如果氧化物成為首選的背板技術，是否可能在兩片玻璃中的其中一片使用較低品質的鹼性玻璃？謝謝。

That's a very good question. So oxide TFT is going to require two probably higher performance pieces of glass relative to what it is that's used today. And that mainly has to do with that the backplane is more challenging. It's just the backplane is more challenging, then you're creating an overall sandwich and then you want to match the expansion rates between the top and the bottom of that device. If you have an alkali containing glass in the top, first you have the potential for poisoning in these relatively complicated electronics packages. But also you have different rates of thermal expansion. So those factors will tend to bring you into a more concentrated approach of two pieces of technical glass.

這是個非常好的問題。氧化物TFT相較於目前使用的玻璃，可能需要兩片性能更高的玻璃。主要原因在於背板更具挑戰性。背板確實更具挑戰性，接著你會形成整體的夾層結構，並希望裝置上下兩片材料的膨脹率能匹配。如果上層使用含鹼玻璃，首先在這些相對複雜的電子封裝中，可能會有「毒化」的風險。此外也會有不同的熱膨脹係數。因此這些因素往往會使你走向更集中的做法：採用兩片技術玻璃。

You hear the more one piece two pieces of glass when you hear about OLEDs. And especially those OLEDs that are a little bit lower pixel count and whether or not it's bottom emission or top emission. Bottom omission has a potential to use a different encapsulant material other than glass because it's coming out the bottom, the top of it doesn't necessarily need to be transparent. Most of the work that we are seeing right now go on is leaning towards the technology node of two pieces of glass. But this is going to be a continually evolving technology as the industry seeks true differentiation.

談到OLED時，你會聽到「一片玻璃、兩片玻璃」這樣的說法。尤其是那些像素數較低的OLED，以及它是底部出光還是頂部出光。底部出光有可能使用玻璃以外的封裝材料，因為光從底部出來，上方不一定需要透明。我們目前看到的大多數工作，正傾向於採用兩片玻璃的技術節點。但隨著產業尋求真正的差異化，這會是一項持續演進的技術。

Thank you for all the color.

謝謝你提供這麼多細節。

Great, Jim as a close out?

很好，Jim來做個結語？

Yes, just a couple quick comments at the end. First of all, we're going to have a fairly robust investor relations schedule over the next months. There's actually four conferences. First we'll be at the Jefferies Global Conference in New York City on May 8, and that we'll be at the JPMorgan TNT Conference in Boston on May 15. Back in New York City at the Barclays TNT Conference on May 22. And finally at the Bernstein Strategic Decisions Conference in New York City on May 31. So hopefully you gather we'll be on the road a lot, we would love to see you all in person.

好的，最後簡單補充幾點。首先，接下來幾個月我們會有相當密集的投資人關係行程。實際上有四場會議。首先是5月8日在紐約市的Jefferies全球會議，接著5月15日在波士頓的摩根大通TNT會議。5月22日回到紐約市參加Barclays TNT會議。最後是5月31日在紐約市的Bernstein策略決策會議。所以你大概可以看出我們會經常在外奔波，也很希望能與各位當面見面。

Lastly, our annual shareholder meeting is going to be held tomorrow right here in Corning, New York starting 11.00. If you happen to be in the Corning area, please stop by. But for those who can't, we will be audio casting the website, on the website for the speeches.

最後，我們的年度股東大會將於明天在紐約州康寧市這裡舉行，11:00開始。如果你剛好在康寧地區，歡迎過來。至於無法到場的朋友，我們會在網站上提供演講的音訊直播。

In a wrap up, we've just completed four months of the year and we continue to feel very good about our results. Our non-Display businesses are all performing well and continue to demonstrate the growth potential we've been anticipating. And in Display, we're more encouraged now that we were just a few months ago especially on the pricing front. Looking forward to continuing this momentum as we head into the second quarter and we will continue to keep you updated along the way. Ken?

總結一下，今年已經過了四個月，我們對於業績表現仍然感到非常滿意。我們的非顯示器業務都表現良好，並持續展現我們先前預期的成長潛力。而在顯示器方面，特別是在價格面，我們現在比幾個月前更受鼓舞。展望第二季，我們期待延續這股動能，也會在過程中持續向各位更新。Ken？

Thank you, Jim, and thank you all for joining us today. A playback of the call available being at 10.30 AM Eastern time today go until 5.00 PM Eastern time on Wednesday, April 25. To listen, dial 800-475-6701. The access code is 244213 and the audio cast of course available on our website during that time. Operator, that concludes our call, pleased disconnect all lines.

謝謝你，Jim，也謝謝各位今天加入我們。本次電話會議的重播將於今天美東時間上午10:30提供，並持續到4月25日（週三）美東時間下午5:00。收聽請撥打800-475-6701。存取碼為244213，當然在此期間也可於我們網站收聽音訊直播。接線員，我們的電話會議到此結束，請斷開所有線路。

Thank you.

謝謝。

Thank you, Hope.

謝謝你，Hope。