康寧 (GLW) 2015 Q2 法說會逐字稿

Welcome to the Corning Incorporated Quarter two, 2015 results. This conference is being recorded. It is my pleasure to turn the call over to Ann Nicholson, Division Vice President of Investor Relations. Please go ahead.

歡迎參加康寧公司（Corning Incorporated）2015 年第二季業績說明。本次電話會議將被錄音。我很高興把電話會議交給投資人關係部門副總裁 Ann Nicholson。請開始。

Thank you, Brad, and good morning. Welcome to Corning's second quarter conference call. With me today is Wendell Weeks, Chairman and Chief Executive Officer; Jim Flaws, Vice Chairman and Chief Financial Officer; and Tony Tripeny, Corporate Controller.

謝謝你，Brad，大家早安。歡迎參加康寧第二季電話會議。今天與我一同出席的有董事長兼執行長 Wendell Weeks；副董事長兼財務長 Jim Flaws；以及公司財務控管長 Tony Tripeny。

Before we begin our formal comments, I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially. These factors are detailed in the Company's financial reports.

在我們開始正式發言之前，我想提醒各位，今天的談話包含前瞻性陳述，屬於 1995 年《私人證券訴訟改革法》（Private Securities Litigation Reform Act of 1995）所界定的範圍。這些陳述涉及多項風險、不確定性及其他因素，可能導致實際結果出現重大差異。相關因素已在本公司財務報告中詳述。

You should also note that this presentation contains a number of non-GAAP measures. A reconciliation can be found on our website. We have slides posting with our webcast today live that go with the formal comments.

您也應注意，本簡報包含多項非 GAAP 衡量指標。其調節表可在我們的網站上找到。我們今天的網路直播也同步提供投影片，配合正式發言內容。

Now I'll turn the call over to Jim.

現在我把電話會議交給 Jim。

Thanks, Ann, good morning, everyone. I'm pleased to share with you our second quarter results, but before I dive into earnings, I'd like to take a minute to highlight our July 21 organizational announcement. In case you missed it, I announced my retirement effective at the end of November. After 42 years with one of the world's most enduring and successful Company, and with the Company in very strong financial and operational position, I believe it is a good time to hand the reins over to the next generation of leaders. I'm very pleased today to introduce you to Tony Tripeny, our current Corporate Controller, who many of you have met and who will become Corning's Chief Financial Officer in September.

謝謝你，Ann，各位早安。我很高興與各位分享我們第二季的業績，但在我深入談獲利之前，我想先花一點時間重點說明我們 7 月 21 日的組織公告。如果您錯過了，我已宣布將於 11 月底正式退休。在這家全球最長青且最成功的公司之一服務 42 年後，且公司目前在財務與營運上都處於非常強健的狀態，我認為現在是把重任交給下一代領導團隊的好時機。今天我也很高興向各位介紹 Tony Tripeny——我們現任公司財務控管長，許多人都見過他——他將於 9 月出任康寧財務長。

Tony has 30 years of finance experience at Corning including playing a key role in numerous acquisitions. In the last 10 years as corporate controller, Tony has been integral in forming and executing our current strategic framework, and most recently, delivering more than two years of earnings growth. Tony has worked very closely with me, and more importantly, he and Wendell worked together for many years including time in our telecom business. I'm delighted that Tony is succeeding me. I'll be taking some time to introduce Tony to our investors over the next few months. For today, Tony will be joining Wendell and me for the Q&A portion of the call.

Tony 在康寧擁有 30 年的財務經驗，並在多起併購案中扮演關鍵角色。在過去 10 年擔任公司財務控管長期間，Tony 在建立並執行我們目前的策略架構上居功厥偉，最近更促成連續兩年多的獲利成長。Tony 與我密切合作；更重要的是，他與 Wendell 多年來一直共事，包括在我們電信業務的那段時間。我很高興由 Tony 接任我的職務。接下來幾個月，我會花一些時間把 Tony 介紹給我們的投資人。今天，Tony 將與 Wendell 和我一起參與電話會議的問答環節。

So now let's turn to our performance. Our results clearly demonstrate we are executing to our 2015 plan which we laid out for our investors in early February at our Investor Day. Our businesses are delivering strong results, our acquisitions are delivering synergies and opportunities for new growth. And we're returning even more cash to shareholders.

現在讓我們回到業績表現。我們的結果清楚顯示，我們正在落實 2015 年計畫；該計畫我們已在 2 月初的投資人日向投資人說明。各項業務表現強勁，我們的併購也帶來綜效與新的成長機會。同時，我們也把更多現金回饋給股東。

So let's start with a quick look at our overall first half performance. Core sales were up 2.3%, and without the impact of foreign exchange that increase would have been 4.7%. We are delighted with this increase, especially knowing we were not counting on sales growth from the Display segment. Now our earnings and EPS growth were even more impressive over the first half. Earnings were up 10.5% and would have been up 13.4% without the impact of FX. And we leveraged those earnings growth into higher EPS growth through our share repurchase program. EPS was up 15.9% and without the impact of FX it was up 19%. We are delighted by these strong performance numbers, particularly given this period of low economic growth, and we hope you are also.

先快速看一下上半年整體表現。核心銷售額成長 2.3%；若不計外匯影響，增幅將為 4.7%。我們對這項成長感到非常振奮，尤其是我們原本並未預期顯示事業部會帶來銷售成長。而上半年獲利與每股盈餘（EPS）的成長更為亮眼。獲利成長 10.5%；若不計匯率影響，將成長 13.4%。我們也透過庫藏股回購計畫，將獲利成長進一步轉化為更高的 EPS 成長。EPS 成長 15.9%；若不計匯率影響，成長 19%。在經濟成長偏低的環境下，我們對這些強勁的表現數字感到非常滿意，也希望各位同樣如此。

I'd like to highlight some specifics. In our Optical Communications business, we've been strategically positioning ourselves over the last several years by focusing on product innovations and acquisitions to capture growing demand in optical networks, and we are winning. Customers are increasingly turning to our innovative solutions to solve their speed, capacity, and cost challenges. And while the overall telecom CapEx market grows about 2%, the optical portion is more than double that at 5%, and we're growing faster than the optical portion, in particular were our advantage solutions and fiber to the home data centers. We're growing at twice the pace than the optical portion of the telecom market. This strong performance began several years ago and we think it will continue.

我想強調幾個具體重點。在光學通訊業務方面，過去幾年我們透過聚焦產品創新與併購，策略性地布局以掌握光網路需求成長，而我們正在勝出。客戶愈來愈多地採用我們的創新解決方案，以解決其速度、容量與成本方面的挑戰。整體電信資本支出（CapEx）市場約成長 2%，其中光學部分的成長率超過兩倍、約為 5%；而我們的成長速度又快於光學部分，特別是在我們的優勢解決方案以及光纖到府（FTTH）與資料中心相關領域。我們的成長速度是電信市場光學部分的兩倍。這樣的強勁表現始於數年前，我們認為將會持續。

Now let's focus again on the first half of 2015 and compare it to the first half of 2013. Sales over this period are up 40% and NPAT is up 72% over the last two years. We had strong results again in Q2 which I will cover in more detail in a minute. I want to emphasize that the strong performance is driven by both organic and inorganic sales growth. Before the impact of FX, our Q2 organic sales were up 10%, and we grew 21% before FX including the sales from acquisitions. We expect this out performance in our Optical Communications business to continue over the next several years, assuming continued adoption of both fiber to the home and bigger, more efficient data centers.

現在再把焦點放回 2015 年上半年，並與 2013 年上半年比較。這段期間銷售額成長 40%，而過去兩年稅後淨利（NPAT）成長 72%。我們在第二季再次取得強勁成果，我稍後會更詳細說明。我想強調，這樣的強勁表現同時來自有機與非有機的銷售成長。若不計外匯影響，我們第二季有機銷售成長 10%；若包含併購帶來的銷售並不計外匯影響，則成長 21%。我們預期光學通訊業務的這種超越市場表現將在未來數年持續，前提是光纖到府與更大型、更高效率的資料中心持續被採用。

Now turning to Gorilla Glass, Gorilla Glass renamed the cover glass of choice for branded devices and is gaining share. Additionally, they have new products that are gaining traction and even more in the pipeline. First, Gorilla Glass 4 is now designed into 43 models as OEMs embrace its superior drop performance. Its penetration is the fastest yet of any of our new Gorilla Glass introductions, and even better, it has a price premium. Second, our sales of Gorilla Glass in China are up 45% year-to-date. And, third, we've just announced our first smartphone customer using Gorilla Antimicrobial glass. Finally, our overall efforts to drive volume, reduce cost, and innovate with price premiums for the cover glass market have contributed to performance, and Specialty Materials gross margin is up 170 basis points year-to-date.

接著談 Gorilla Glass。Gorilla Glass 仍是品牌裝置首選的蓋板玻璃，且市占率持續提升。此外，我們有新產品正逐步獲得市場動能，且還有更多產品在研發管線中。第一，Gorilla Glass 4 目前已被設計導入 43 款機型，因 OEM 廠商採用其更優異的抗摔落表現。其滲透速度是我們歷次 Gorilla Glass 新品導入中最快的；更好的是，它具備溢價能力。第二，我們在中國的 Gorilla Glass 銷售年初至今成長 45%。第三，我們剛宣布首位採用 Gorilla 抗菌玻璃（Gorilla Antimicrobial glass）的智慧型手機客戶。最後，我們在推動出貨量、降低成本，以及以溢價創新蓋板玻璃市場方面的整體努力，也帶動了表現；特殊材料事業部的毛利率年初至今提升 170 個基點。

Now turning to Display, the pricing environment for LCD glass continues to improve. Prices declined moderately in Q2 as expected. I spent some time on the April call explaining the difference between our overall price declines and what I call the heartbeat of glass price declines. As a reminder, we are in the midst of a significant move from thick to thin glass. Because we have incented customers with price to make the switch, it makes our overall price declines look larger. As a reminder, we did this incenting because our margin dollars on thin remain neutral to thick and we gained free capacity.

接著談顯示事業。LCD 玻璃的定價環境持續改善。第二季價格如預期般溫和下滑。我在 4 月的電話會議中花了一些時間說明我們整體價格下滑與我所稱的玻璃價格下滑「心跳」之間的差異。提醒一下，我們正處於從厚玻璃轉向薄玻璃的重要轉換期。由於我們以價格誘因鼓勵客戶完成轉換，這使得我們的整體價格下滑看起來更大。再次提醒，我們之所以提供這些誘因，是因為薄玻璃的毛利金額與厚玻璃大致持平，且我們因此獲得了額外的閒置產能。

The heartbeat price decline focuses on price decline without the thick to thin impact and without customer mix impact. We've been making very steady progress with the lower heartbeat declines as this graph shows. As we near the end of the big thick to thin conversion at some of our major customers, our overall price declines and the heartbeat decline should converge. Prices for Q3 under most of our LCD contracts have now been set. I'm pleased to say we expect to see moderate price declines again in Q3. You may recall that some of these contracts contain price mechanisms that establish defined relationships between our prices and the average prices offered by comparable glass suppliers. Customer input to date indicates the average price for LCD glass will result in moderate price declines in Q3. So when you look at the heartbeat of pricing under our contracts, without the impact of product mix, on this basis, declines have been in the 2s for four consecutive quarters and we expect this to continue in Q3.

心跳價格降幅聚焦於價格下降本身，不包含由厚轉薄的影響，也不包含客戶組合變動的影響。如這張圖所示，我們在降低心跳降幅方面一直取得非常穩健的進展。隨著我們在部分主要客戶的大規模由厚轉薄轉換接近尾聲，我們的整體價格降幅與心跳降幅應會趨於一致。我們大多數 LCD 合約下第三季的價格現已敲定。我很高興地表示，我們預期第三季將再次出現溫和的價格下降。你可能記得，其中一些合約包含定價機制，用以建立我們的價格與可比玻璃供應商所提供平均價格之間的明確關係。截至目前的客戶回饋顯示，LCD 玻璃的平均價格將在第三季帶來溫和的價格降幅。因此，當你在不考慮產品組合影響的情況下，觀察我們合約下的定價心跳時，在此基礎上，降幅已連續四個季度落在 2% 左右，我們預期第三季將延續此趨勢。

Now during the quarter, we also reached an agreement with Gerresheimer AG to acquire their pharmaceutical glass tubing business that has operations in Vineland, New Jersey and Pisa, Italy. With this acquisition, we expect to accelerate our innovations for the pharmaceutical glass packaging market. As part of the transaction, the two companies will enter into a 10-year supply agreement for pharmaceutical glass tubing and also form an equity venture, 75% owned by Corning, to focus on accelerating Corning's innovations for the pharmaceutical glass packaging market. The transaction enables Corning to bring its revolutionary new technologies to pharmaceutical glass packaging market with Gerresheimer, a long standing leader in the industry. In addition, we have now formed a new internal division called Corning Pharmaceutical Technologies with the new assets and an equity venture to drive our innovations into the marketplace at a faster pace. It may take a while but we believe the size of the prize here for Corning is $1 billion in sales.

另外，在本季度期間，我們也與 Gerresheimer AG 達成協議，收購其藥用玻璃管業務，該業務在美國新澤西州 Vineland 與義大利比薩設有營運據點。透過這項收購，我們預期將加速我們在藥用玻璃包裝市場的創新。作為交易的一部分，兩家公司將簽訂為期 10 年的藥用玻璃管供應協議，並成立一家股權合資企業（康寧持股 75%），以專注於加速康寧在藥用玻璃包裝市場的創新。此交易使康寧得以與 Gerresheimer（該產業長期領導者）合作，將其革命性新技術導入藥用玻璃包裝市場。此外，我們已以新資產與該股權合資企業為基礎，成立新的內部事業部門「康寧藥用技術」（Corning Pharmaceutical Technologies），以更快速度推動我們的創新進入市場。這可能需要一些時間，但我們相信此處對康寧而言的獎賞規模可達 10 億美元的銷售額。

So now let me turn to our second quarter details, and as a reminder, these are core results. Second quarter sales, gross margin, operational expenses and equity earnings were all in line with our expectations coming into the quarter. The stronger dollar did reduce core sales in the second quarter by $61 million versus a year ago. The primary currency exposure here is the euro. Gross margin was 45%, up year-over-year driven by gross margin improvements in Optical, Environmental, Specialty and Life Sciences. SG&A and R&D spending were down in absolute dollars versus Q2 last year driven by cost controls and the synergies from the CPM acquisition.

接下來我來說明第二季的細節，並提醒各位，以下為核心（core）結果。第二季的銷售額、毛利率、營運費用與權益法收益皆符合我們在進入本季度時的預期。美元走強使第二季核心銷售額較去年同期減少 6,100 萬美元。此處主要的匯率曝險為歐元。毛利率為 45%，年增，主要由光學通訊、環境科技、特殊材料與生命科學等事業的毛利率改善所帶動。SG&A 與研發支出以絕對金額計較去年第二季下降，主要受成本控管以及 CPM 收購帶來的綜效所驅動。

Net income was up 7% versus last year despite the impact of the strong dollar which had an impact of $18 million on our profit. This impact versus Q2 results last year is approximately $0.01 per share, similar to what we outlined coming into the quarter. Earnings per share was $0.38, up $0.04 or 12% versus last year and better than the Street consensus by $0.01. I'm delighted with these results.

儘管美元走強對我們獲利造成 1,800 萬美元的影響，淨利仍較去年成長 7%。相較去年第二季，該影響約為每股 0.01 美元，與我們在進入本季度時所說明的相近。每股盈餘為 0.38 美元，較去年增加 0.04 美元或 12%，並較華爾街一致預期高出 0.01 美元。我對這些結果感到非常高興。

Now let's go through the segments starting with Display. Display sales were $963 million in Q2. Sequentially, price declines were moderate and volume was up in the low-single-digits, both as expected. Year-over-year volume was up nearly 10%. Gross margins in Display were consistent with last year driven by the additional volume and synergies offsetting price declines. Net income was down just slightly year-over-year. Our continued cost reductions boosted by the CPM synergies and moderate pricing environment have positioned us to maintain stability in this business and continue its strong cash flow generation. We are delighted with the results.

現在我們從顯示科技（Display）開始逐一檢視各事業部門。第二季顯示科技銷售額為 9.63 億美元。就季比而言，價格降幅溫和、出貨量小幅（低個位數）成長，皆符合預期。年比而言，出貨量成長近 10%。顯示科技的毛利率與去年一致，主要因新增出貨量與綜效抵銷了價格下降。淨利僅較去年小幅下降。我們持續的成本降低（並受 CPM 綜效加持）以及溫和的定價環境，使我們得以維持該業務的穩定性並持續創造強勁的現金流。我們對結果非常滿意。

Now looking at the supply chain, we estimate forward-looking weeks of inventory ended Quarter 2 slightly better than Q1, which is a positive indicator. Our model indicates that forward-looking weeks of inventory will also shrink in the back half and I will discuss that more in the outlook segment. Now turning to Optical Communications, Q2 sales were $800 million, up 17% versus last year and better than our forecast. Organic growth was 10% before the impact of foreign exchange and acquisitions made up the balance. Fiber to the home and data center sales in North America drove sales growth. The stronger dollar also impacted sales here by $27 million. Net income was up 44%. Now Optical Communications has some euro-denominated costs, so the FX impacted profitability here only slightly. Additional volume in all parts of the business and acquisitions drove the higher net income.

再看供應鏈，我們估計以前瞻口徑計算的庫存週數在第二季末略優於第一季，這是一項正面指標。我們的模型顯示，前瞻庫存週數在下半年也將縮減，我會在展望部分進一步說明。接著看光學通訊（Optical Communications），第二季銷售額為 8.00 億美元，較去年成長 17%，且優於我們的預測。在扣除匯率與併購影響前，有機成長為 10%，其餘成長來自匯率與併購。北美的 FTTH（光纖到府）與資料中心銷售帶動了營收成長。美元走強亦使此處銷售額減少 2,700 萬美元。淨利成長 44%。由於光學通訊有部分以歐元計價的成本，因此匯率對此處獲利能力的影響僅屬輕微。業務各部分的額外出貨量與併購推動了較高的淨利。

In Environmental, Q2 sales were $260 million, down 9% versus last year, and that was driven primarily by foreign exchange trimming sales by approximately $17 million. We had some euro-denominated costs, but the majority of costs in Environmental are dollar based, so the stronger dollar was a drag on year-over-year profitability and impacted net income by $6 million versus last year. But continued execution on costs helped the segment actually maintain net income year-over-year delivering $46 million.

在環境科技（Environmental）方面，第二季銷售額為 2.60 億美元，較去年下降 9%，主要是匯率因素使銷售額約減少 1,700 萬美元所致。我們有部分以歐元計價的成本，但環境科技的大多數成本以美元為主，因此美元走強拖累了年比獲利，並使淨利較去年減少 600 萬美元。不過，持續的成本執行使該事業部仍能維持年比淨利，達 4,600 萬美元。

Now in Specialty Materials, Gorilla Glass volume was up mid-teens year-over-year. Versus last year, segment sales were down 9% driven by the lower sales of advanced optic products which is experiencing a cyclical downturn as part of the semiconductor industry and the strong dollar. Continued cost reductions, growth of Gorilla Glass volume, and the Gorilla Glass 4 price premium helped improve profitability so the segment was able to maintain year-over-year net income despite the sales decline.

在特殊材料（Specialty Materials）方面，Gorilla Glass 出貨量年比成長約十幾個百分點。相較去年，該事業部銷售額下降 9%，主要受先進光學產品銷售下滑所影響；該產品因半導體產業景氣循環而處於下行階段，另加上美元走強。持續的成本降低、Gorilla Glass 出貨量成長，以及 Gorilla Glass 4 的價格溢價有助於提升獲利能力，因此儘管銷售下滑，該事業部仍得以維持年比淨利。

In Life Sciences, Q2 sales were down 5% year-over-year and net income was consistent. FX was the primary cause of the year-over-year decline. Net income would have increased 9% without the impact of foreign exchange rates. Equity earnings from Dow Corning were $63 million, in line with expectations. The stronger dollar impacted Dow Corning sales and earnings and reduced Corning's equity's earnings by $4 million versus last year. Earnings were helped by a one-time IP settlement which was embedded in our original guidance.

在生命科學（Life Sciences）方面，第二季銷售額年比下降 5%，淨利則持平。匯率是年比下滑的主要原因。若不考慮匯率影響，淨利本可成長 9%。來自 Dow Corning 的權益法收益為 6,300 萬美元，符合預期。美元走強影響了 Dow Corning 的銷售與獲利，並使康寧的權益法收益較去年減少 400 萬美元。獲利亦受一次性 IP 和解收益所助，該項已包含在我們原先的指引之中。

Now let's turn to the balance sheet. We delivered free cash flow of $380 million in the quarter. Our capital spending forecast remains at the $1.3 billion to $1.4 billion for the full year. During the quarter, we increased the rate of our share repurchases by about 25% compared to Q1. We spent $626 million on share repurchases in the quarter. This increase reflects our view that the Company's -- with the Company's current performance and future prospects our stock is undervalued. We expect the Company's cash generation to remain strong and we want to put the cash to work for shareholders. As a result, the Board of Directors authorized a new $2 billion share repurchase program on July 15. Since October 2011, the Board has authorized $9 billion for share repurchases. Our balance sheet cash is healthy at $5.5 billion, and we ended the quarter with approximately $2 billion of cash in the United States.

接著看資產負債表。本季度我們創造了 3.80 億美元的自由現金流。我們對全年資本支出預測維持在 13 億至 14 億美元。本季度期間，我們將股票回購速度較第一季提高約 25%。本季度我們用於股票回購的金額為 6.26 億美元。此一增加反映我們的看法：以公司目前的表現與未來前景而言，我們的股價被低估。我們預期公司的現金創造能力將維持強勁，並希望將現金投入運用以回饋股東。因此，董事會於 7 月 15 日核准新的 20 億美元股票回購計畫。自 2011 年 10 月以來，董事會已核准 90 億美元用於股票回購。我們的資產負債表現金水位健康，為 55 億美元，且本季度末在美國境內約有 20 億美元現金。

Now I'd like to swing to the outlook. First of all, we expect the Q3 impact of foreign exchange rates to be similar to Q2, or approximately a negative $15 million of impact and $0.01 of EPS compared to Quarter 3 a year ago. Let's start with Display. After analyzing demand at retail, talking with our customers, and reviewing external research reports, we're updating our expectations for the LCD glass market. We now expect the worldwide LCD glass market at retail to grow approximately 6% to 7% year-over-year in square feet. This forecast is down from our April view as we've reduced demand outlook for IT applications and television units in certain geographic markets. This lowers our retail outlook by approximately 94 million square feet, or approximately 200 basis points.

現在我想轉到展望。首先，我們預期第三季外匯匯率的影響將與第二季相近；相較於去年第三季，約為負1,500萬美元的影響，並使每股盈餘（EPS）減少0.01美元。我們先從顯示事業開始。在分析零售端需求、與客戶交流並檢視外部研究報告後，我們正在更新對LCD玻璃市場的預期。我們目前預期全球LCD玻璃零售市場（以平方英尺計）年增約6%至7%。此預測較我們4月的看法下修，因為我們下調了特定地理市場中IT應用與電視機出貨的需求展望。這使我們的零售展望下調約9,400萬平方英尺，約相當於200個基點。

With monthly data available through May year-to-date, worldwide television units sell-through is now behind our expectations, and we have revised our view to flat year-over-year unit growth. However, screen size growth is tracking better than our expectations and we're raising our forecast to the average size of televisions which help offset a portion of the weaker unit growth. We still expect television glass at retail to grow 8% and small format devices to grow 16% at retail this year. I know small format devices may not excite you, but the 16% in this area is a 63-million-square-foot increase for the overall market for the year. We don't believe these minor adjustments in television demand reflect any fundamental change to the longer-term drivers of TV demand. We continue to expect excellent long-term demand for televisions driven by the replacement of older sets and technology innovations such as 4K television. We believe the supply chain will work down some inventory in the second half and will bring down weeks of inventory by approximately two by year end. We view this drop as a mild inventory adjustment.

截至今年5月的月度數據顯示，全球電視整機的終端銷售（sell-through）目前落後於我們的預期，因此我們已將看法修正為年對年單位數成長持平。不過，螢幕尺寸成長的表現優於我們的預期，我們因此上調電視平均尺寸的預測，這有助於抵消部分較弱的單位數成長。我們仍預期今年電視用玻璃在零售端成長8%，小尺寸裝置在零售端成長16%。我知道小尺寸裝置可能不會讓各位感到興奮，但此領域16%的成長，代表全年整體市場增加6,300萬平方英尺。我們不認為這些電視需求的小幅調整反映了電視需求長期驅動因素的任何根本性變化。我們仍預期電視的長期需求非常強勁，主要由汰換舊機與4K電視等技術創新所帶動。我們相信供應鏈將在下半年消化部分庫存，並在年底前將庫存週數降低約兩週。我們將此下降視為溫和的庫存調整。

So then for the LCD glass industry in the third quarter, we expect LCD glass market to be up by low-single-digits sequentially and our sales volume to also be up in line with the market growth. We expect our share to remain stable. We continue to see balanced supply demand for Corning's display glass. We're running our online capacity at full utilization and we're keeping some of our capacity idle to maintain good balance. We believe that other glass makers are also running their online capacity at full utilization and they have publicly stated that they are keeping some capacity idle.

因此，就第三季LCD玻璃產業而言，我們預期LCD玻璃市場將較前一季呈現低個位數成長，而我們的銷售量也將隨市場成長同步上升。我們預期市占率將維持穩定。我們持續看到康寧顯示玻璃的供需維持平衡。我們讓已上線產能滿載運轉，同時保留部分產能閒置，以維持良好平衡。我們相信其他玻璃製造商也在讓其上線產能滿載運轉，且他們已公開表示保留部分產能閒置。

Now let me turn to pricing. As I mentioned, we expect to see moderate pricing declines again for our glass in Q3. I think the question on many people's minds is whether the interaction between the softening demand and the reduction of two weeks of inventory will cause more severe price drops in Q4. Our conclusion is no for a variety of reasons which I will outline in a minute.

接著我談談價格。如我先前提到的，我們預期第三季玻璃價格仍將出現溫和下滑。許多人心中的問題是：需求轉弱與庫存減少兩週之間的交互作用，是否會在第四季造成更劇烈的價格下跌。我們的結論是否定的，原因有多項，我稍後會說明。

First, though, let me outline our expectations on market volumes for Q3 and Q4. We're forecasting a low-single-digit percentage sequential increase for Quarter 3 and a corresponding decrease in Quarter 4. These volumes combined with the large normal seasonality of television retail demand in Q4 are enough to bring inventories down a couple of weeks, and this calculation includes the softer television outlook that I mentioned earlier. We do not believe the sequence of volume shifts in inventory moves will trigger a more severe price event. The industry is in a much stronger position than during past inventory adjustments.

不過首先，我先說明我們對第三季與第四季市場出貨量的預期。我們預測第三季較前一季呈現低個位數百分比成長，而第四季則相應下降。這些出貨量變化，加上第四季電視零售需求的顯著季節性，足以使庫存下降約兩週；此計算也已納入我先前提到的較疲弱電視展望。我們不認為這一連串的出貨量變動與庫存移動會觸發更嚴重的價格事件。相較於過去的庫存調整時期，產業目前處於更強勢的位置。

We believe price declines in our contracts will remain moderate for several reasons. Panel makers are profitable and they're getting the benefit of the weaker yen. There is a balance supply/demand in the LCD glass industry. The operating margins of our competitors appear, based on publicly available information, to be such that they can't afford large price declines if they hope to remain profitable. And the rapid thick to thin conversions that we saw in recent quarters are nearing completion, so our future quarter-over-quarter ASP comparisons should no longer reflect as much of those thin discounts associated with the conversions. Corning has a variety of levers to pull to steer calmly through slight market weakness and inventory adjustments. These include idling capacity, especially at a time of normal tank repairs. We think industry conditions and those levers will help, and we believe other glass makers have similar options.

我們認為合約中的價格下滑將維持溫和，原因有幾點。面板製造商目前具備獲利能力，且正受惠於日圓走弱。LCD玻璃產業供需維持平衡。根據公開資訊，我們競爭對手的營業利益率顯示，若他們希望維持獲利，將無法承受大幅降價。此外，近幾季我們看到的由厚轉薄的快速轉換已接近完成，因此未來各季之間的ASP（平均售價）比較，將不再反映那麼多與轉換相關的薄化折價。康寧有多種槓桿可運用，以在輕微市場疲弱與庫存調整期間平穩應對。其中包括讓部分產能閒置，尤其是在例行熔爐（tank）維修的時點。我們認為產業條件與這些槓桿將有所助益，也相信其他玻璃製造商有類似選項。

Now let me turn to Optical Communications. In Q3, we expect sales to be up mid-teens year-over-year driven by the continued strength in fiber to the home and data centers in North America. Also contributing revenue growth will be the impact of our three previously announced acquisitions. Our sales have been better than expected in the first half and our outlook for the back half is for more growth, so we have upgraded our full year outlook here. We expect Optical Communications sales will grow mid-teens for the full year. In Environmental, we expect continued strength in the end market in Q3. Heavy-duty diesel and light-duty substrate sales are up versus last year reflecting healthy end markets. However, we expect year-over-year Q3 sales for us to be down mid-single-digits due to the impact of the euro and other foreign exchange.

接著我談光學通訊。第三季，我們預期銷售額年對年成長中十位數百分比，主要由北美光纖到府（FTTH）與資料中心需求持續強勁所帶動。同時，我們先前宣布的三項併購也將對營收成長有所貢獻。上半年我們的銷售表現優於預期，而下半年展望仍將持續成長，因此我們上調了此處的全年展望。我們預期光學通訊全年銷售額將成長中十位數百分比。在環境科技方面，我們預期第三季終端市場將持續強勁。重型柴油與輕型載具觸媒載體（substrate）銷售較去年增加，反映終端市場健康。然而，由於歐元及其他外匯的影響，我們預期第三季銷售額年對年將下降中個位數百分比。

Now I'll turn to Specialty Materials. We expect Gorilla volume to be up high-single-digits sequentially, but flat with last year's very strong Q3. The mix effect of Gorilla Glass 4 will help somewhat, but the continued weakness in the advanced optics markets driven by softness at our semiconductor customers will more than offset this leading us to Q3 sales versus last year to be down by high-single-digits. In Life Sciences, we expect sales to be down slightly with last year's third quarter driven by a weaker euro. Without the foreign exchange impact, sales would have been up the low-single-digits.

接著我談特殊材料。我們預期Gorilla的出貨量較前一季成長高個位數，但與去年非常強勁的第三季相比則持平。Gorilla Glass 4的產品組合效應將帶來一些助益，但由於半導體客戶需求疲弱所導致的先進光學市場持續走弱，將超過上述助益，使我們第三季銷售額相較去年下降高個位數百分比。在生命科學方面，我們預期受歐元走弱影響，銷售額將較去年第三季小幅下滑。若不考慮外匯影響，銷售額本可呈現低個位數成長。

Continuing the rest of our Q3 forecast, we expect Q3 equity earnings from Dow Corning to be approximately $65 million, which is in line with Q2 and last year. Versus last year, sales are impacted by exchange rates there, but equity earnings are flat due to volume and cost benefits. We expect our gross margin to be approximately 44%, consistent with last year. SG&A and R&D spending will be 13% and 8% of sales, respectively, and consistent with 2014. Other Income/Other Expense is expected to be a net expense of approximately $50 million and our effective tax rate for 2015 is expected to be approximately 18%.

延續我們第三季其餘預測，我們預期第三季來自Dow Corning的權益法收益約為6,500萬美元，與第二季及去年相當。相較去年，該處銷售額受到匯率影響，但由於出貨量與成本效益，權益法收益持平。我們預期毛利率約為44%，與去年一致。銷售、一般及行政（SG&A）與研發（R&D）支出分別將占銷售額的13%與8%，並與2014年一致。其他收入／其他費用預期為淨費用約5,000萬美元，而我們2015年的有效稅率預期約為18%。

So to summarize before we go to Q&A, we remain well-positioned in each of our segments and are outperforming our competition. We're prepared to weather disruptions through our advanced products and lower cost position. We are the best in the world at specialty glass and ceramics and optical physics, and these capabilities are becoming more and more relevant to a broad range of industries. When you put it all together, it is clear our strategy is working. We're growing earnings today, we're leveraging our innovation for future growth, and we're delivering significant value for investors.

在進入問答之前做個總結：我們在各事業部門仍具備良好定位，且表現優於競爭對手。我們已準備好憑藉先進產品與較低成本的競爭地位來因應各種干擾。我們在特殊玻璃與陶瓷以及光學物理領域居於全球領先，而這些能力正對更廣泛的產業變得愈來愈重要。綜合來看，很明顯我們的策略正在奏效。我們今天正在提升獲利，並運用創新以推動未來成長，同時為投資人創造顯著價值。

Now before I proceed to Q&A, I'd just like to thank investors for the opportunity I've had to engage with you as being Corning's Chief Financial Officer. I've always enjoyed the opportunity to meet and discuss Corning with you. Now I'll turn it over to Ann.

在我進入問答之前，我想感謝投資人，讓我有機會以康寧財務長的身分與各位互動交流。我一直很享受與各位會面並討論康寧的機會。現在我把時間交給Ann。

Thank you, Jim. Brad, we're -- open the line for questions now, please?

謝謝你，Jim。Brad，我們——現在請開放提問線路，好嗎？

(Operator Instructions)

(接線員指示)

Rod Hall with JPMorgan.

JPMorgan 的 Rod Hall。

Yes, good morning, guys, and thank you for the question. Congratulations on retirement, Jim. Good working with you over these last few years, so congrats on that. And welcome, Tony, as well.

是的，各位早安，也謝謝讓我提問。恭喜你退休，Jim。過去幾年很高興能與你合作，所以也恭喜你。也歡迎 Tony 加入。

I wanted to start off with, I guess, Jim, a little bit of discussion on the trajectory of demand through H2, clearly you guys are reducing guidance for Q3 a little bit or, at least missing our expectations a little bit as demand weakens here, but then the overall LCD glass demand picture you're painting actually causes us to think that our numbers are maybe a little low in Q4. So, I guess, I would like to get some commentary on how you see trajectory yourself? And maybe if you could tie into that a little bit of commentary on 4K, panel pricing keeps dropping faster than we expected. Do you guys think that elasticity on 4K could be now more accentuated in Q4 if consumers hang in there and prices are a little bit lower? So just wanted to get a comment on that.

我想先從——我想，Jim——談一下下半年（H2）需求走勢。很明顯你們把第三季（Q3）指引稍微下修，或者至少在這裡需求轉弱之下，略低於我們的預期；但你們對整體 LCD 玻璃需求的描述，反而讓我們覺得我們第四季（Q4）的數字可能偏低。所以我想請你評論一下你自己怎麼看這個走勢？另外也請你順帶談談 4K：面板價格下滑速度比我們預期更快。你們是否認為，如果消費者再觀望一下、而價格再低一些，4K 的需求彈性在第四季可能會更明顯？想請你對此做個評論。

And then, lastly, I guess, just some demand color, all of us are trying to figure out what is going on with global demand generally, so any further color you could give us on what you see regionally? Are you seeing any signs of stabilization, et cetera? Sorry, a bunch of questions there, but, thanks.

最後，我想再問一些需求面的細節。我們都在試著搞清楚全球整體需求到底發生了什麼事，所以你能否再多提供一些你們在各區域看到的狀況？你們是否看到任何穩定的跡象等等？抱歉一次問了很多，但謝謝。

Thanks, Rod. Well, I enjoyed working with you also. I think you just set the record for six questions in one.

謝謝你，Rod。我也很享受與你合作。我想你剛剛創下了一次問六個問題的紀錄。

Yes, sorry (laughter).

是的，抱歉（笑聲）。

Let me start with comments on the trajectory. Our July glass pulling from our customers, panel makers, is equal to what we've seen in June. We are not actually seeing any slowdown from our customers at this point in time. So I hope that helps on the trajectory.

我先從走勢的評論開始。我們客戶（面板廠）在 7 月的玻璃拉貨量，與 6 月看到的相同。就目前而言，我們其實沒有看到客戶有任何放緩。希望這能對走勢判斷有所幫助。

We believe, as I said in my outlook, that we will expect to see that there is some impact as customers recognize the inventory, the slowdown in end market, and what we're showing is that we will see a glass market demand go down in Q4 versus Q3. We could get that wrong a little, it could be a little higher in Q3 and a little -- decline a little more in Q4. It's tough to tell, right now, as I said, we haven't seen panel makers pull back.

我們認為——如同我在展望中所說——當客戶意識到庫存、終端市場放緩時，會有一些影響；我們的看法是第四季相較第三季，玻璃市場需求會下滑。我們可能會稍微判斷錯：第三季可能略高一些，而第四季可能——下滑幅度再大一些。目前很難判斷；如我所說，我們還沒看到面板廠縮手。

Relative to ultra-high-definition, we clearly think it will be important in the coming years. As you know, our forecast of sell-in is 27 million units, or sell-through is 27 million, our forecast of sell-in is higher than that. We are, we believe, that price points are approaching the inflection point. We don't know if we will get there in Q4. I suspect, given the overall weaker economic news, that maybe people will be driving that price premium down to the 1.5 in which case that should be very good for demand for us. I think I got most of your questions.

至於超高解析度（Ultra-High-Definition），我們顯然認為它在未來幾年會很重要。如你所知，我們對 sell-through 的預測是 2,700 萬台；我們對 sell-in 的預測高於此數。我們相信價格點正接近轉折點。我們不確定是否會在第四季達到。我猜，考量整體較疲弱的經濟消息，大家可能會把那個價格溢價壓到 1.5 倍左右；若是如此，對我們的需求應該會非常有利。我想我回答到你大部分的問題了。

And if I could just add a little bit of color for you, Rod. I can see how you could get to your numbers, I do. And what makes it hard to do just purely quantitatively is that you have some real behavioral dynamics here. What happened is in the first part of the year the set makers were quite worried that they could get enough panels to be able to support the back half demand, and so they were building inventory.

Rod，如果我可以再補充一些背景。我理解你怎麼推到你的數字，我確實理解。而讓事情難以用純量化方式推估的原因，是這裡存在一些明顯的行為動態。年初時，整機廠很擔心能否取得足夠的面板來支撐下半年的需求，所以他們在建立庫存。

Panel makers' inventory levels are very healthy, and they are profitable. So they can support continued price declines in panels and still may decide to run with higher utilization than is currently in our forecast for Quarter 3, so, therefore, you could run hotter in Q3 like you are anticipating. But then, what we'd say, if you're going to come back to the same total year, that would mean that Quarter 4 would be less than what it is we're coming to. So I can see how you can get your cycle, it is perfectly reasonable.

面板廠的庫存水位非常健康，而且他們是獲利的。因此，他們可以承受面板價格持續下跌，仍可能決定以高於我們目前第三季預測的稼動率來運轉；所以，你可能會如你所預期的那樣在第三季跑得更熱。但我們要說的是，如果全年總量要回到同一個水準，那就意味著第四季會低於我們目前的假設。所以我能理解你怎麼得到你的循環推估，這是完全合理的。

I think the key thing for us is that what is the dynamic in glass? And in glass, we have inventory levels at the low end of healthy, and so that gives ourselves and our competitors, really, a lot of levers to adjust to whatever the Quarter 4 is, assuming we are in the range of the total end market demand that we are discussing. Either we've got product development we can do, we've got glass tank repairs that we can pull ahead, right. So we have all the levers that we need to sort of keep demand and supply, whether your cycle is right or the one that we are currently basing our forecast is right. Does that make sense?

我認為對我們而言的關鍵是：玻璃端的動態是什麼？在玻璃端，我們的庫存水位處於健康區間的低端，因此這讓我們以及競爭對手，確實有很多槓桿可以因應第四季的各種情境——前提是總體終端市場需求大致落在我們討論的範圍內。不論是我們可以做產品開發，或是可以把玻璃窯爐（glass tank）維修提前，對吧。所以我們具備所需的所有槓桿，來大致維持供需平衡——不管是你的循環判斷正確，或是我們目前用來做預測的那個判斷正確。這樣說有道理嗎？

Yes, that's helpful, Wendell, thank you very much.

有的，這很有幫助，Wendell，非常感謝。

Amitabh Passi with UBS.

UBS 的 Amitabh Passi。

Hi, guys, good morning. I just had a couple of questions. Jim, I just wanted to clarify your comments on Gorilla Glass, I think you mentioned volume is flat year-over-year. I just wanted to confirm, how should we be thinking about ASP declines and how should be thinking about revenue trends for Gorilla Glass year-over-year?

各位早安。我有幾個問題。Jim，我想釐清你對 Gorilla Glass 的評論；我記得你提到出貨量年對年持平。我想確認一下：我們應該如何看待 ASP 下滑，以及 Gorilla Glass 年對年的營收趨勢應該怎麼看？

And then, just a quick question on LCD display, I think part of your assumption set assumes that the panel makers remained relatively healthy. I was just wondering what happens if things were to deteriorate and if they were to become unprofitable in the back half of the year, how should we think about the potential ramifications for you guys, especially with respect to glass pricing?

另外，關於 LCD 顯示器我也快速問一下：我想你們的部分假設是面板廠維持相對健康。我想知道如果情況惡化、而且在下半年變得不獲利，對你們可能會有哪些影響，特別是就玻璃定價而言，我們應該怎麼思考？

Well, so what I mentioned on Gorilla Glass in Q3 is the volume would be flat versus Q3 a year ago. Just as a reminder, Q3 a year ago was extremely high because of some of our customers' big model launches. So we're actually delighted that we're holding it flat with that. Price declines, we had price declines in Q3 and a price premium on Q4, Gorilla Glass 4. As we see more Gorilla Glass 4 showing up in the mix, particularly as we head into Q4, you actually should be seeing very stable price effect. And we are looking for a very good quarter for -- in Gorilla also.

我在第三季提到的 Gorilla Glass，是指第三季的出貨量會與去年第三季持平。提醒一下，去年第三季因為部分客戶的大型機種上市，量非常高。所以我們其實很高興能在那樣的高基期下仍維持持平。價格下滑方面：我們在第三季有價格下滑，而第四季則有 Gorilla Glass 4 的價格溢價。隨著 Gorilla Glass 4 在產品組合中的占比提高，特別是進入第四季時，你其實應該會看到非常穩定的價格效應。我們也預期 Gorilla 會有一個非常好的季度。

On panel makers, I just won't to speculate. Their profitability is much higher right now than it has ever been in any softening period or inventory correction. So it would take a fairly massive drop in panel prices and we don't, are not forecasting that. We're expecting panel prices to drop about 9% going forward and they will still remain profitable if we're right on that.

至於面板廠，我不想做臆測。他們目前的獲利能力，比過去任何一次景氣轉弱或庫存修正期間都高得多。所以必須要面板價格出現相當大幅度的下跌才會發生你說的情況，而我們並沒有、也未預測會那樣。我們預期未來面板價格大約下跌 9%，如果我們的判斷正確，他們仍會維持獲利。

Okay, and then could I just --

好的，那我能不能再——

Can I just add one quick thing for you on Gorilla, just for fun, right. So for fun, through Quarter 2, we just passed cumulative $4 billion in revenue in Gorilla and over 1 billion square feet of glass. And the nice thing about the price piece here is, we anticipate overall for Specialty CSM take a double-digit profit growth here, including Gorilla for the year. And what Gorilla 4 is going to allow us to do is basically flat price declines and that is going to be terrific.

我可以再補充一個關於 Gorilla 的小重點，純粹有趣分享一下。截至第二季，我們在 Gorilla 的累計營收剛剛突破 40 億美元，玻璃出貨累計超過 10 億平方英尺。而在價格這一塊的好消息是，我們預期 Specialty CSM 全年整體將實現兩位數的獲利成長，其中也包含 Gorilla。Gorilla 4 將讓我們基本上把價格下滑壓到持平，這會非常棒。

And then, I guess, just a quick follow-up, probably for you, Wendell, just on telecom, can you just give us maybe some color on the demand -- you've mentioned fiber to the home in your commentary, would love to get incremental insight in terms of the geographic trends you're seeing? And then just sequentially, you are guiding to sales kind of flattish, just wondering, is that just seasonality or are you seeing some sort of maybe moderation in demand?

接著我想再快速追問一下，可能是問你，Wendell，關於電信這塊：能否請你就需求狀況多給我們一些顏色？你在評論中提到光纖到府（FTTH），很希望能再多一些增量洞見，尤其是你們看到的地理區域趨勢。另外就季度環比來看，你們指引銷售大致持平；想請教這只是季節性因素，還是你們看到需求有某種程度的放緩？

So for Optical, I think Jim used this, probably the most fun statistic which is we normally say that our long-term goal in Optical is to grow at twice the rate of telecom CapEx. And what we have been seeing now for quite a while is actually, excluding acquisitions, we're growing at four times telecom CapEx, and including acquisitions over 10 times telecom CapEx.

就光學（Optical）而言，我想 Jim 用過一個可能最有趣的統計：我們在光學業務的長期目標，通常是以電信資本支出（telecom CapEx）增速的兩倍來成長。而我們現在已經觀察到相當一段時間：若不含併購，我們的成長速度是電信 CapEx 的四倍；若包含併購，則超過電信 CapEx 的十倍。

And what is driving that is a combination of the right products, but also our strength in the right regions to get to your second question. So we're seeing very strong North America, we're seeing very strong fiber to the home, and we're seeing very strong data center work, and that combination of our strong position in data centers and our strong position in fiber to the home is what's behind this really powerful growth story.

推動這一切的因素，是正確產品的組合，同時也包括我們在正確區域的優勢，來回應你第二個問題。我們看到北美非常強勁、光纖到府非常強勁、資料中心相關專案也非常強勁；而我們在資料中心與光纖到府的強勢地位結合在一起，正是這個非常有力成長故事的核心。

Just one other comment, you mentioned sequential, ordinarily Q3 and Q2 on sequentials are pretty flat, but we're delighted by the year-over-year in both of those quarters being up the mid-single-digits in sales. Generally, if you look at telecom cycle lapsing anything strange, low first quarter, higher second and third quarters, and then fourth quarter there is where the most variability in history shows up.

再補充一點，你提到環比：一般而言，第三季相對第二季的環比通常相當持平；但我們很高興看到這兩個季度的年增率都呈現銷售中個位數成長。通常如果你看電信循環、排除任何異常因素，第一季偏低、第二與第三季較高，而第四季則是歷史上變動性最大的季度。

Again, thanks, guys. And, Jim, congrats.

再次感謝各位。另外，Jim，恭喜。

Thank you.

謝謝。

I was just going to add, I think that that growth in the third quarter is in the mid-teens.

我再補充一下，我認為第三季的成長是在十幾個百分點（mid-teens）。

Year over year, right?

年對年，對吧？

Yes, that is correct, year-over-year.

是的，沒錯，是年對年。

Yes, I was talking sequentially. Okay, cool, thank you.

是的，我剛剛是在講環比。好的，了解，謝謝。

Patrick Newton with Stifel.

Stifel 的 Patrick Newton。

Yes, thank you for taking my questions. And, Tony, congrats on the new position, Jim, congratulations on the retirement.

是的，謝謝讓我提問。另外，Tony，恭喜你升任新職；Jim，也恭喜你退休。

Thank you.

謝謝。

Thank you.

謝謝。

I guess, Jim, I want to focus on what you touched on with the move from thick to thin glass nearing completion. I think previously you discussed thin as being 0.7 mm or less, and so I'm trying to help get some clarity on how thin can the industry actually go? When you make the comment that it is nearing completion, does that mean that we are nearing getting the industry below 0.7 mm, or are we approaching a lower thickness like 0.4 mm?

我想，Jim，我想聚焦在你提到的厚玻璃轉向薄玻璃、且接近完成的進程。我記得你之前談到薄玻璃是 0.7 毫米或更薄，所以我想更清楚了解：產業實際上到底能做到多薄？當你說接近完成時，是指產業即將低於 0.7 毫米，還是正在接近更低的厚度，例如 0.4 毫米？

What I'm talking about is the move where we started from 0.7 and now I'm talking about getting to 0.5. But, clearly, in some formats, we have some customers at 0.4 and smaller generations, but what I was talking about is the big move was what we started in 2008 when almost everybody was 0.7 and getting most people to 0.5.

我指的是我們從 0.7 開始，現在談的是做到 0.5 的這個轉變。當然，在某些規格上，我們有一些客戶已經做到 0.4，而且是在較小世代線（smaller generations）；但我所說的「大轉變」，是指我們在 2008 年啟動的那一波：當時幾乎所有人都是 0.7，目標是把大多數人推進到 0.5。

Okay. And if we think about that move and going to 0.5 and the capacity that it naturally builds for you, are there any CapEx implications on the horizon whereas this move to thin starts to near completion that Corning will have to start investing in glass capacity?

了解。如果我們思考這個轉變、以及做到 0.5 對你們自然帶來的產能提升，那麼當薄化進程接近完成時，未來是否會有任何資本支出（CapEx）上的影響，使得 Corning 必須開始投資新增玻璃產能？

No, I think -- we still think we have productivity increases coming. As some customers go below 0.5, we are not expecting to offer a price discount to that, but we still should get capacity from it. So the only CapEx that is on the horizon for us is that as you have more glass you have to finish even though you're melting capacity does not have to go up, and so we've been spending on some capital for finishing. And then the only thing that would be on the horizon for glass capacity would be if someone were to build a Gen 10 operation in China which we've talked about, I think what, now for over a year, but we don't expect that to be on the horizon until late 2016, early 2017.

不會，我認為——我們仍然相信還會有生產力提升。當部分客戶低於 0.5 時，我們不預期會因此提供價格折讓，但我們仍應該能從中獲得產能。因此，我們眼前唯一的 CapEx 是：隨著玻璃量增加，即使熔融（melting）產能不需要提升，你仍需要更多後段加工（finishing）能力，所以我們一直在後段加工上投入一些資本。至於玻璃產能方面，唯一可能需要關注的是：如果有人要在中國建一條 Gen 10 產線——我們已經談了大概超過一年——但我們預期那不會在短期內發生，可能要到 2016 年底或 2017 年初。

Okay. And just one cash question, Jim, since that's your favorite topic, is that you've announced that $2 billion buyback, I think that expires at the end of 2016. In that timeframe, I think you should pay out about $1 billion in dividends. So given that kind of $3 billion in returning capital to shareholders, I think you mentioned you have $2 billion in cash in the US. So I am curious, if just cash from operations will allow you to fund the total $3 billion and return a value to shareholders, or is there a need to repatriate cash or find another way to finance those returns?

好的。再問一個現金問題，Jim，既然這是你最喜歡的主題：你們宣布了 20 億美元的庫藏股回購，我想這個授權在 2016 年底到期。在這段期間內，我想你們大概會支付約 10 億美元的股利。所以合計大約 30 億美元的股東資本回饋；而你也提到你們在美國有 20 億美元現金。因此我想了解：營運產生的現金流是否足以支應這 30 億美元、並把價值回饋給股東？還是需要匯回海外現金（repatriate cash）或以其他方式籌資來完成這些回饋？

Well, we're always looking for ways to bring cash back from offshore, and, as I think you've seen, we've been successful doing that. We did raise some debt in the second quarter, so we're very comfortable with our ability to continue to do this without giving you an exact specifics of a repatriation.

我們一直在尋找把海外現金帶回來的方法，而且如你所見，我們在這方面做得相當成功。我們也在第二季發行了一些債務，所以我們對於持續執行這些回饋的能力非常有信心；但我不會在此提供匯回（repatriation）的具體細節。

Thank you, good luck.

謝謝，祝順利。

Mark Sue from RBC.

RBC 的 Mark Sue。

Thank you. Thank you, Jim, it's been a pleasure. And welcome, Tony. I have a question on FX, hedging will eventually roll off, so perhaps your thoughts on your plan of action considering additional hedging at the moment seems cost prohibitive. So do we think about passing the increased cost down to your customers or do we revisit US-based pricing, which is in effect, a price hike as well for your customers. So maybe your thinking there?

謝謝。謝謝你，Jim，與你合作很愉快。也歡迎你，Tony。我有一個關於外匯（FX）問題：避險最終會到期失效，所以想請教你們在目前額外避險看起來成本過高的情況下，行動方案是什麼。我們是否會把增加的成本轉嫁給客戶？或是重新檢視以美元計價的定價（US-based pricing），這對客戶而言也等同於漲價。想聽聽你們的想法？

I will start, we are continuing to look for innovative ways to deal with what I'll remind everybody is in 2018, it is quite a ways away, and the possibility of is there something we can do with a unique hedging structure that might allow us to not have the impact of the yen going from essentially 99 to the low 120s right now. So we continue to evaluate that.

我先說：我們持續在尋找創新的方式來因應。我也提醒大家，這是在 2018 年，距離現在還很久；我們在評估是否能透過某種獨特的避險結構，讓我們不至於受到日圓從大約 99 走到目前 120 出頭的影響。所以我們會持續評估。

We also are evaluating whether we could return to US dollar pricing. And, perhaps, ways of doing that are pricing some of our new products in US dollars. And fundamentally, we also think that the industry, the glass industry, will continue to reduce price declines to a lower and lower level and maybe could even flatten them out or raise them at some point in time. So we are hard at work at that, but we're not panic stricken either as we go along, it is only the middle of 2015.

我們也在評估是否能回到以美元計價。而可能的做法之一，是把部分新產品改以美元定價。從根本來看，我們也認為玻璃產業將持續把價格下滑幅度壓得越來越低，甚至在某個時間點可能趨於持平，或出現上調。因此我們正全力推進這些工作，但也不至於因此驚慌，畢竟現在才 2015 年年中。

Okay, sounds fair. Jim, a question on screen sizes, we are moving to larger screens and 4K will come initially in larger sizes. Are we getting to a point of diminishing marginal utility reaching optimal screen sizes? You're getting the benefit of size offsetting slowing units, so the question that we get is how long can that last?

好的，聽起來很公平。Jim，關於螢幕尺寸有個問題：我們正朝更大尺寸移動，而 4K 一開始會先出現在較大尺寸。我們是否正走到邊際效用遞減、接近最佳螢幕尺寸的點？你們透過尺寸變大來抵消出貨量放緩的好處，所以大家會問這種情況還能持續多久？

We don't see it slowing down. I think you've heard me say that I, every year, have a bet with our team that we're going to exceed their forecast and we just raised it again. The average screen size -- I use the 30 and above metric because I think it is more useful -- is growing very nicely again this year. And the thing that is really going to be helpful for us, I think, in the future is that as 4K becomes a bigger and bigger proportion of demand, that drives you to getting a bigger television. And right now, the average 4K television is over 50 inches. And if you think about that compared to the average television in the 30 and above category which is really only 41 right now. So as that grows as part of demand we think we will continue to see average screen size grow.

我們沒有看到它放緩。我想你們聽我說過，我每年都會跟團隊打賭我們會超過他們的預測，而我們剛剛又把預測上調了。平均螢幕尺寸——我用 30 吋以上這個指標，因為我覺得更有用——今年又成長得非常不錯。而我認為未來真正會對我們有幫助的是，隨著 4K 在需求中占比愈來愈大，這會推動你去買更大的電視。目前 4K 電視的平均尺寸超過 50 吋。如果你把這跟 30 吋以上類別的平均電視相比，現在其實只有 41 吋。所以隨著 4K 作為需求的一部分持續成長，我們認為平均螢幕尺寸會繼續上升。

The other thing I will remind everybody is that televisions actually are getting average screen size up, the television itself doesn't have to grow as much because the manufacturers have continued to reduce the edge size, so what we used to call the bezel, although many televisions do not really have one of those plastic things anymore. We continue to think this is going to help us for a number of years.

我也提醒大家另一點：電視的平均螢幕尺寸確實在變大，但電視本體不必等比例變大，因為製造商持續縮小邊框尺寸，也就是我們以前稱為 bezel 的部分，雖然很多電視現在其實已經幾乎沒有那種塑膠邊框了。我們仍然認為這會在未來好幾年持續對我們有利。

Helpful. Last thing, Wendell, if we took a look at telecom, how about your thoughts of accelerating M&A for telecom, and Clark and his team, it is a segment growing very fast, can we add velocity to deal making considering the positive outlook? How about a blank check for Clark?

很有幫助。最後一點，Wendell，如果我們看看電信領域，你對加速電信產業的併購（M&A）有什麼看法？Clark 和他的團隊所在的這個區塊成長很快，在正向展望下，我們能否加快交易節奏？要不要給 Clark 一張空白支票？

(laughter) No such thing as blank checks. But the core of your idea, which is, given the strength of our position and how much wind there is in our category, we would like to accelerate that further with continued acquisitions. I think that is clearly our strong intent and it's just a matter of getting the ones that are the right fit at the right price.

（笑聲）沒有什麼空白支票這種事。但你想法的核心是：鑑於我們的地位很強、而且我們這個類別的順風很大，我們希望透過持續收購來進一步加速。我認為這顯然是我們強烈的意圖，剩下就是在對的價格找到最合適的標的。

That's helpful. Thank you, and our pleasure, Jim.

很有幫助。謝謝，也很高興，Jim。

Thanks, Mark.

謝謝，Mark。

Wamsi Mohan with Bank of America.

美國銀行的 Wamsi Mohan。

Yes, thank you. Congrats, Tony, and, Jim, we will miss you. My first question is on Display profitability, expectations, previously, you'd expected that to be flat on a year-on-year basis. Now given the slowdown you've alluded to can you talk about the magnitude of potential profit decline for the full year on Display? And I have a gross margin follow-up.

是的，謝謝。恭喜你，Tony，也會想念你，Jim。我第一個問題是關於顯示（Display）事業的獲利能力：先前你們預期年對年會持平。現在考量你們提到的放緩，能否談談顯示事業全年潛在獲利下滑的幅度？我還有一個毛利率的追問。

So, clearly, with less volume, we would expect not to have the ability to hit the [stoop] flatness that we were hoping for in Display. We probably will have a little bit down, but I won't categorize how much that is at this point in time, but it could be slightly down. As you saw, it was slightly down in Q3 when our volume wasn't as strong as it had been in Q1.

所以，很明顯地，在量比較少的情況下，我們預期顯示事業將無法達到我們原本希望的那種「持平」狀態。可能會小幅下滑，但我現在不會去界定下滑多少，不過可能會略為下降。如你所見，在第三季，當我們的量不像第一季那麼強時，確實是小幅下滑。

We continue to feel like we've got excellent cost reduction ideas and the Display team is working on how they can do even better in cost reduction in this period of slightly lower demand.

我們仍然覺得我們有很好的降成本構想，而顯示團隊也正在研究，在需求略低的這段期間，他們如何把降成本做得更好。

Thanks, Jim. And then your gross margin guidance indicates a step down here from 45% to 44% in the third quarter, you are guiding shipments up quarter-on-quarter for LCD glass, so should we conclude that your LCD utilization rate is going to be down quarter-on-quarter in 3Q? And then the fourth quarter you are expecting the market to be down seasonally, so should we expect gross margins to also contract sequentially from Q3 to Q4?

謝謝，Jim。接著，你們的毛利率指引顯示第三季會從 45% 下滑到 44%。你們指引 LCD 玻璃出貨量將季對季增加，所以我們是否應該推論你們第三季的 LCD 稼動率會季對季下降？另外第四季你們預期市場會有季節性下滑，那我們是否也應該預期毛利率會從第三季到第四季再度依序收縮？

No, I think that we have a little bit of an impact in Q3 from inventory changes, but that's just slight. But I'm not expecting our gross margin in Q4 to be materially different.

不，我認為第三季會受到一些庫存變動的影響，但那只是輕微的。但我不預期我們第四季的毛利率會有實質上的不同。

And last one for me, if I could. Jim, you noted that the heartbeat pricing and true pricing to converge over time here, but can you help us with what the magnitude of the delta that exists now between the heartbeat of LCD glass pricing and true pricing over this quarter and maybe for the last couple of quarters?

如果可以的話，我最後一個問題。Jim，你提到這裡的 heartbeat 定價與 true pricing 會隨時間收斂，但你能否協助我們了解：目前 LCD 玻璃定價的 heartbeat 與 true pricing 之間的差距（delta）有多大，尤其是本季以及過去幾季大概的情況？

I will just give you a rough CFO math. We're in the 2s and the overall pricing is in the 3s, but we definitely think we will drive that overall pricing down then start to converge.

我就用一個大概的 CFO 算法給你。我們在 2 字頭，而整體定價在 3 字頭；但我們確實認為我們會把整體定價往下拉，然後開始收斂。

And this ties to an earlier question, and an answer you heard from Jim. I want to make sure that we have portrayed this accurately for you. We believe the market will continue to move to thinner, okay. We have requests from customers, of course, at 0.4 and all the way down to 0.3. We are developing glasses, of course, that go to 0.1 and 0.2.

這也呼應到先前的一個問題，以及你剛聽到 Jim 的回答。我想確保我們已經把這點正確地呈現給你。我們相信市場會持續往更薄的方向走，好嗎。我們當然也收到客戶的要求，厚度從 0.4 一直到 0.3。我們當然也在開發厚度可到 0.1 和 0.2 的玻璃。

What is different about our approach is we're not going to sell those at a discount. That is our preferred strategy. So that is what begins to bring the combination of the first set of moves to get down to thinner glass, sort of 0.5 area, as that comes through completion, that will naturally bring that heartbeat or invoice pricing in line with the mix level, which is the thinner versus thicker.

我們做法不同之處在於：我們不會以折價來銷售那些產品。那是我們偏好的策略。因此，當第一階段把玻璃做到更薄、也就是大約 0.5 這個區間的那一系列動作完成後，會自然地讓 heartbeat 或發票定價與組合水準一致，也就是薄玻璃相對於厚玻璃的組合。

But then the next step is that now as we inevitably go thinner still, which competitively we love to do because our process is fundamentally better equipped to go thin than our competitions' processes. That our strategy is to do that without a pricing decline, now remains to be seen, how effective we will be with that, but that is our plan and approach. Does that make sense?

但下一步是：當我們不可避免地再往更薄走時——在競爭上我們很樂於這麼做，因為我們的製程在本質上比競爭對手的製程更適合做薄——我們的策略是在不降價的情況下做到更薄。至於我們能做到多有效，還有待觀察，但這就是我們的計畫與做法。這樣說有道理嗎？

Yes, it does, thanks, Wendell.

是的，有道理，謝謝，Wendell。

Simona Jankowski with Goldman Sachs.

高盛的 Simona Jankowski。

Hi, thanks very much, and I wanted to add my congratulations to Jim and Tony, as well. Wendell, if I can follow up on the point you just made there at the end, were you saying that you no longer expect to be pricing at a discount starting with thicknesses of 0.4 mm and below? And I just wanted to understand the premise behind that. Is it that you do not expect your competitors to be able to achieve those kinds of thicknesses, or maybe not of the same cost structure as Corning?

嗨，非常感謝，我也想向 Jim 和 Tony 表達恭喜。Wendell，如果我可以追問你剛才最後提到的那點：你的意思是，從 0.4 毫米及以下的厚度開始，你們不再預期會以折價定價嗎？我也想了解這背後的前提。是因為你不預期競爭對手能做到那樣的厚度，或是即使做得到，也無法達到與康寧相同的成本結構？

Yes, the [sack end] is that, 0.4 is one level, 0.3 is another, right. We believe that competitively it gets harder to do and there isn't as much cost improvement as you begin to move to those thicknesses because of the relative difficulty of handling that much glass flow and doing it in a stable way.

是的，結論是：0.4 是一個層級，0.3 又是另一個層級，對吧。我們相信在競爭上會變得更難做到，而且當你開始往那些厚度移動時，因為要處理那麼多玻璃流並以穩定的方式完成，其相對難度更高，所以成本改善的幅度也不會那麼大。

The way you have to think about as you go thinner -- and it's why we get more square footage out when you do it -- is the way you go thinner is you go faster. The faster you pull glass the more unstable the sheet becomes when you are doing something like fusion. And when you're doing something like float, you've got a fundamental problem of the relative weight and the physics of the glass on top of a tin bath. Those things combine, we think, to give us an opportunity to be able to differentiate ourselves on thin.

你在厚度愈做愈薄時必須這樣思考——這也是為什麼你這麼做時我們能產出更多平方英尺——也就是：愈薄就得拉得愈快。在做像融合（fusion）這類製程時，拉玻璃的速度愈快，玻璃片材就會變得愈不穩定。而在做像浮法（float）時，你會遇到一個根本問題：玻璃在錫槽上方的相對重量與其物理特性。我們認為這些因素結合起來，讓我們有機會在薄玻璃上做出差異化。

0.4 is more within the range of our competitors' capabilities than 0.3 is easily, but what we believe is there's an opportunity here for us to try to change that pricing trajectory for thin, and maybe even, especially for stuff that we can only do uniquely, much like we did Gorilla Glass to price in dollars. We expect there to be competition in 0.4, 0.3 we think it will be harder still, but this is part of our plans to try to stabilize Display long term, and ultimately we'd like it to turn the corner and start making, growing profitability-wise.

0.4（毫米）相較於0.3（毫米），更落在競爭對手能力範圍之內；但我們相信，我們有機會在薄玻璃上嘗試改變那條定價走勢，甚至——特別是對於只有我們能獨特做到的產品——就像我們當年把Gorilla Glass定價到以「美元」計價一樣。我們預期0.4會有競爭；0.3我們認為會更難，但這是我們試圖長期穩定Display（顯示）業務計畫的一部分；最終我們希望它能扭轉局面，並在獲利成長方面開始改善。

Like I said, remains to be seen. Can it happen, right? Remains to be seen how all the competitive dynamic will play out, but that is the approach we'd like to take.

就像我說的，還有待觀察。它能發生嗎，對吧？競爭動態最後會怎麼演變仍有待觀察，但這就是我們希望採取的方法。

Okay, that's helpful. And just maybe to bracket that a little bit in terms of magnitude, how far away are we from the transition to 0.5 mm being done, or maybe put another way, what percent of volume remains to be converted? And then maybe if there is any similar guideposts you can put around some of the other transitions you talked about over the next two or three years that would be helpful?

好，這很有幫助。那再把幅度框一下：距離0.5毫米的轉換完成還有多遠？或者換個說法，還有多少百分比的出貨量尚未轉換？另外，如果你能就你提到未來兩到三年其他幾個轉換提供一些類似的里程碑指標，也會很有幫助。

We don't give out specific numbers, but I would say over the past three quarters, you have been seeing very big moves in the average amount of glass going thick to thin and in this upcoming quarters, two quarters, it will be much smaller.

我們不提供具體數字，但我會說，在過去三個季度，你已經看到平均玻璃用量從厚轉薄有非常大的變化；而在接下來的一到兩個季度，變化幅度會小得多。

Okay. And then, Jim, one more near-term question for you which is that you talked about channel inventory is coming down for the industry in the second half of the year, but the guidance for the third quarter volumes to be up in the low-single-digits still would imply normal seasonal, or even slightly above seasonal growth for the industry, which seems to put more of the onus for the correction on the fourth quarter. And I guess I was curious why you would not expect that to happen earlier, most likely in the third quarter, especially given some of the guidance by the panel makers?

了解。Jim，再問一個短期問題：你提到今年下半年產業通路庫存會下降，但你們對第三季出貨量的指引仍是低個位數成長，這意味著產業呈現正常季節性、甚至略高於季節性的成長；看起來就把庫存修正的壓力更多放在第四季。我想知道的是，為什麼你不預期修正會更早發生——很可能在第三季——尤其考量到面板廠的一些指引？

Normally, we do see a slight increase in the absolute level of inventory in Q3. We are expecting a little bit of build in absolute square footage, that's based on what the panel makers are running right now. And then we always see a big downdraft in the absolute square footage in Q4 with the big seasonality of television. If we see a slight correction from panel makers in, for example, September the last month of the quarter, that could be slightly different, but right now what the panel makers are giving to us is not showing it that way.

通常我們確實會在第三季看到庫存絕對水位小幅上升。我們預期絕對平方英尺會有些許增加，這是根據面板廠目前的稼動狀況。然後我們總是在第四季看到絕對平方英尺大幅下滑，因為電視的強烈季節性。如果面板廠在例如九月（該季最後一個月）出現小幅修正，情況可能會略有不同；但目前面板廠給我們的資訊並沒有顯示會那樣發生。

I would prefer your approach. I would prefer you to be right, which is then to correct more in Quarter 3 and make it even slighter in Quarter 4. But past behavior tells us they will probably run the way it is, we've described, or earlier on the call you heard Rod, it could even be a little hotter in Quarter 3.

我比較喜歡你的看法。我也希望你是對的——也就是第三季修正更多、第四季修正更小。但過去的行為告訴我們，他們大概會照我們描述的方式運行；或者你在電話會議前面也聽到Rod說，第三季甚至可能會更熱一些。

Great, thank you.

很好，謝謝。

Joseph Wolf with Barclays. Joseph, your line is open.

Barclays的Joseph Wolf。Joseph，你的線路已開通。

Hi, can you guys hear me?

嗨，你們聽得到我嗎？

We can.

聽得到。

Okay, thank you. Again, congratulations to Jim and Tony. Thanks a lot for all your help. I guess, I wanted to focus on cash for a second, I do not think this was answered, can you just give us where we are on the balance of the original share buyback? You mentioned the $623 million in the quarter. How much is left in the $1.5 billion along with the $2 billion? Are there points at which you would think about accelerating? Is that share price driven or market driven?

好，謝謝。再次恭喜Jim和Tony。非常感謝你們一直以來的協助。我想先把焦點放在現金（cash）上，我不認為這題有被回答：你們能否說明一下原先股票回購（share buyback）計畫的餘額目前到哪裡了？你提到本季回購了6.23億美元。在15億美元那一段以及20億美元那一段之中，還剩多少？你們會在什麼情況下考慮加速？那是由股價驅動還是由市場驅動？

I think for Q1 and Q2 we were at a little over $1.1 billion and, obviously, we continue to buy in July which isn't finished. We have not completed the $1.5 billion, but we will complete it shortly and then we will be available to start spending on the $2 billion, that is our process to finish one and open up the other one officially. We, clearly, at these lower stock prices for Corning, which we think are below the appropriate value, we would buy more.

我想第一季和第二季我們合計大約回購了略高於11億美元；而且很明顯，我們在七月也持續買進，七月尚未結束。我們尚未完成15億美元那一段，但很快就會完成；之後我們就可以開始動用20億美元那一段——我們的流程是先完成一個，再正式啟動另一個。很明顯，在Corning目前較低的股價水準下——我們認為低於其合理價值——我們會買更多。

Great. And then a question on the telecom, I don't know if you've given out -- give us a flavor -- you mentioned the different growth rates. Could you give us a split right now of the difference between the traditional telecom spend and the data center spend? And you mentioned focusing, I guess, on the acquisitions, will there be a focus to stay within that enterprise or the data center side of the business, or do you see opportunities across telecom right now?

很好。再問一題電信（telecom）：我不確定你們是否已經提供過——能否給我們一些概況——你提到不同的成長率。你能否說明目前傳統電信支出與資料中心支出的占比拆分？另外你提到聚焦，我想是指併購（acquisitions）；未來會聚焦在企業端或資料中心端的業務，還是你們目前在整體電信領域都看到機會？

I think from an M&A standpoint we wouldn't be just in the data center spend. We would be across telecom. If you go back to Wendell's earlier answer to the question, we've seen a lot of growth in the fiber to the home in the carrier area, and I think that is certainly something that we're very strong at. It is easy to see where you could generate value in terms of synergies there, in terms of different products or different geographies. As we look at it, we look at it as telecom in total not just the data centers.

我認為從併購角度來看，我們不會只侷限在資料中心支出。我們會涵蓋整體電信。如果你回顧Wendell先前對那個問題的回答，我們在營運商端的FTTH（光纖到府）看到很多成長，而我認為那確實是我們非常強的領域。很容易看出你可以在那裡透過協同效益創造價值，例如不同產品或不同地理區域的互補。我們看的是整體電信，而不只是資料中心。

And can you give us any directional on the sizes of those business? Is the data center business measurable right now? Is it 10% of the business, or is it still just a growing smaller business?

那你能否就這些業務的規模給一些方向性的說法？資料中心業務目前可衡量嗎？它是占業務的10%嗎，還是仍然只是較小、但在成長中的業務？

It's clearly greater than 10% of our business.

它很明顯超過我們業務的10%。

We give enterprise total, enterprise is running about 25% of all of our sales in Optical.

我們提供的是企業（enterprise）合計數；企業端目前約占我們光學（Optical）全部銷售的25%。

Great. Thank you, Ann.

很好。謝謝你，Ann。

Steven Fox with Cross Research.

Cross Research的Steven Fox。

Thanks, good morning. Jim, congratulations, looking forward to seeing the book that comes out of your retirement.

謝謝，早安。Jim，恭喜你，期待看到你退休後出的那本書。

Thanks, Steve. You'll be in it.

謝謝，Steve。你會在書裡。

Thanks. (laughter)

謝謝。（笑聲）

I'll be talking about the Mets.

我會談到大都會隊（Mets）。

I'm not sure if that's a good thing. Just in terms of looking at some of the new product development, I know you touched a lot on thinner glass and hopefully the positive impact there. Can you just sort of round out the status on some of the other innovations you're working on?

我不確定那是不是好事。就一些新產品開發來看，我知道你談了很多更薄玻璃以及希望帶來的正面影響。你能否把你們正在進行的其他創新進展也一併更新一下？

So it sounds like we're still in little ways away from seeing like 0.4 mm into the mix, but what about things like Lotus NXT and Project Phire, and then especially the Iris product that you rolled out, how are those things factoring into the rest of the year, or maybe where the timeline stands on those? Thanks.

聽起來我們距離看到0.4毫米導入產品組合還有一段時間；那像Lotus NXT、Project Phire，尤其是你們推出的Iris產品，這些在今年剩餘時間會如何反映？或者它們目前的時程進度到哪裡了？謝謝。

Great. So NXT is out there now and beginning its qualification cycle. We look to that area as a spot where we will be able to improve our profitability in high-performance displays over the coming quarters. Early returns are pretty good through customers, but our share traditionally in that piece of the market tends to be a little bit lower, and so we are replacing our competitor and that is just going to take some cycle time. Most of those products go into these mobile, smaller mobile devices and so they are specked all the way through by the brand, so you've got to go through two quals. But we are encouraged by our opportunity to improve profitability there.

很好。因此 NXT 現在已經推出，並開始其認證週期。我們把那個領域視為未來幾季能夠提升高效能顯示器獲利能力的切入點。從客戶端回饋來看，初期表現相當不錯，但我們在那一塊市場的傳統市占往往略低一些，因此我們正在取代競爭對手，而這需要一些週期時間。這些產品多數用在行動端、較小型的行動裝置上，因此規格是由品牌端一路完整定義的，所以你必須通過兩道認證。不過，我們對於在那裡提升獲利能力的機會感到鼓舞。

On Phire, we're doing now our first products. We've got our first order on Phire, but it is going to be on -- the first ones are going to start a little smaller, so it's going to be on wearables. More to come. This is a brand new process as well as a brand new product, so it's ramp cycle is going to be a little slower. What we like about it is it offers the opportunity to significantly increase our revenue and profit per device sold, as well as having scratch performance approaching sapphire but the outstanding job performance of Gorilla where sapphire has that weakness of not as good a job performance.

至於 Phire，我們現在正在做第一批產品。我們已經拿到 Phire 的第一張訂單，但會是——第一批會先從較小的規模開始，所以會先用在穿戴式裝置上。後續還會有更多進展。這既是全新的製程，也是全新的產品，因此其爬坡週期會稍微慢一些。我們喜歡它的原因在於，它提供了顯著提高每台裝置銷售所帶來的營收與利潤的機會，同時其抗刮表現接近藍寶石，但又具備 Gorilla 的優異加工/製造表現，而藍寶石在這方面的弱點就是加工/製造表現沒那麼好。

Iris. Iris, which is adding the third piece of glass in a television for the back light, what we have seen here is sort of split early on, just like you would normally expect. We've got a brand new tech that is attacking an established plastic position. What we're seeing out of plastic is I'm introducing some new materials to try to get thinner to sort of fight off the glass attack. And right now that is sort of running 50/50 in early debates for very early adopters. Some people are trying the new plastic set, some people are trying the new glass. It is going to take a little bit of time for us to sort out who wins what in that upcoming technology node. I think the good news is, television is getting thinner, opens up that opportunity for us. Now we will see who wins and who loses in that space.

Iris。Iris 是在電視背光中加入第三片玻璃；我們在這裡看到的情況在初期有點分歧，這也符合一般預期。我們有一項全新技術，正在挑戰既有的塑膠方案。我們看到塑膠端正在導入一些新材料，試圖做得更薄，以對抗玻璃的攻勢。目前在非常早期採用者的初期討論中，大致呈現 50/50。有些人嘗試新的塑膠方案，有些人嘗試新的玻璃方案。我們需要一些時間來釐清在即將到來的技術節點中，誰會在各自的應用上勝出。我認為好消息是，電視正在變得更薄，這為我們打開了機會。接下來就看在那個領域誰贏誰輸。

Final one I would touch on, because Jim didn't get a question on it but he did talk about it through, in the opening, is you saw our announcement on Gerresheimer, the formation of Corning Pharmaceutical Technologies. What that is about is a significant innovation that we have been on for a number of years. This is an industry that moves slowly because it is highly regulated. That being said, we've got a really good product idea here that is a sort of Gorilla size opportunity for us. It is going to take some time, it is going to take a lot of effort, but we feel like that one is going to be one that, hopefully, in a year or so we'll be talking about a lot more.

最後我想提的一點，因為 Jim 沒有被問到這題，但他在開場時確實提到過：你們看到我們關於 Gerresheimer 的公告，也就是成立 Corning Pharmaceutical Technologies。這背後是我們投入多年的一項重大創新。這個產業因為高度受監管，所以推進速度很慢。即便如此，我們在這裡有一個非常好的產品構想，對我們而言是一個規模可比 Gorilla 的機會。這會需要一些時間，也會需要大量努力，但我們覺得這會是那種——希望在一年左右我們會談得更多的項目。

Great, that's all very helpful. And good luck to everyone going forward.

很好，這些都非常有幫助。也祝大家接下來一切順利。

Thanks, Steve.

謝謝你，Steve。

We have time for one more quick question.

我們還有時間再問一個簡短問題。

Brian White with Cantor Fitzgerald.

Cantor Fitzgerald 的 Brian White。

Jim, I'm wondering if you could talk a little bit about TV demand in China, what you're seeing there? And also, I see, you made an announcement around a new Gen 0.5 LCD glass substrate finishing facility, so maybe talk a little bit about Corning's strategy in terms of fab in China?

Jim，我想請你談談中國的電視需求，你們在那裡看到什麼情況？另外，我看到你們宣布了一座新的第 0.5 代 LCD 玻璃基板後段加工（finishing）工廠，所以也請談談康寧在中國設廠策略方面的想法？

The announcement was a finishing factory in China? I think it was Gen 8.5, it wasn't 0.5. And that is, we have melting in China. In Beijing, we have room to grow that bigger if we need to, and then we have -- capable of building finishing factories next to our customers in shipping glass to them. So that has been our strategies to date in China. Now your first question was on the China demand?

你說的公告是一座在中國的後段加工工廠？我想那是第 8.5 代，不是 0.5。而且我們在中國有熔融（melting）產能。在北京，我們有空間在需要時把規模做得更大，然後我們也——有能力在客戶旁邊建後段加工工廠，把玻璃運送給他們。這一直是我們迄今在中國的策略。那你第一個問題是關於中國需求？

China demand.

中國需求。

China demand has been mixed so far. The May holidays were weaker, and we are anxiously awaiting the June numbers. What we are seeing is that in China where the traditionally, a lot of the demand was driven in these big holiday periods -- Chinese New Year, May Day, National Day in October -- is that there is now an increased number of online sales. And our initial tracking of that looks like that's more consistent during the year, and we think that June will actually be a very strong month for that. But that being said, we did lower our China unit forecast based on what we think is a slowing economy slightly from what we'd seen before.

到目前為止，中國需求表現不一。五一假期較弱，我們正急切等待六月的數據。我們看到的是，在中國，過去很多需求傳統上是由這些大型假期檔期帶動——農曆新年、五一、以及十月的國慶——但現在線上銷售的占比提高了。我們初步追蹤顯示，這讓全年需求更為均衡一致，我們認為六月實際上會是非常強勁的一個月。不過即便如此，我們仍基於我們認為經濟較先前所見略有放緩，而下調了中國的出貨量預測。

Glass capacity, I think, as people miss this sometimes on thin, and we sort of take it as everybody understands it, so, therefore, we're not that clear about it. But when we move to thin, you get more glass out of the melting side, but you still have to finish it by piece. So when you see us invest in additional finishing capacity that is a small part of the overall capital spend. So we're still going to need to do that to be able to place the higher flow out of the melting tanks. In terms of melting tank-type CapEx, that's going to move more with new Gen size and big regional moves like the ones that Jim's talking about with 10 and 10.5, and that is pretty early in the game there.

關於玻璃產能，我想有時候大家在談薄化（thin）時會忽略這點；我們往往假設大家都理解，所以反而沒有講得很清楚。當我們轉向薄化時，熔融端可以產出更多玻璃，但你仍然必須逐片完成後段加工。因此當你看到我們投資新增後段加工產能時，那只占整體資本支出的一小部分。但我們仍需要這麼做，才能承接熔融槽（melting tanks）更高的流出量。至於熔融槽類型的資本支出（CapEx），它會更多隨著新的世代尺寸（Gen size）以及像 Jim 提到的 10 代與 10.5 代這種大型區域性布局而變動，而那部分目前仍處於相當早期的階段。

Okay, great. It's been a pleasure, Jim. Congrats.

好的，很棒。很高興與你交流，Jim。恭喜。

Thanks, Brian. Okay, let me just wrap up quickly. Our first half results were outstanding. I think very importantly over the last four quarters the heartbeat of price declines in our LCD business have been trending very favorably, and we expect this to continue in Q3 and Q4, and we think the industry conditions will prevent more severe price drops.

謝謝你，Brian。好，我快速做個總結。我們上半年表現非常出色。我認為非常重要的是，在過去四個季度，我們 LCD 業務的價格下滑節奏（heartbeat）呈現非常有利的趨勢，我們預期這會在第三季與第四季延續，而且我們認為產業環境將會避免更劇烈的價格下跌。

Long-term demand for television remains strong driven by replacement rate and innovation such as 4K. I think our sales and earnings growth in Optical has been outstanding, and demand in the areas of fiber to the home and enterprise solutions are strong, and we're capturing a disproportionate share of the market profits thanks to our advantaged products. And the acquisitions in Optical are really delivering synergies and creating more opportunities for growth.

電視的長期需求仍然強勁，主要由汰換率與 4K 等創新所驅動。我認為我們在光學（Optical）業務的銷售與獲利成長非常亮眼，光纖到府（FTTH）與企業解決方案等領域的需求也很強，我們憑藉具優勢的產品，正在取得高於平均的市場利潤份額。而光學領域的併購也確實帶來綜效，並創造更多成長機會。

And finally, very important, we are delivering on our commitment to return cash to shareholders. We have a strong balance sheet and cash flow and we continue, plan to continue to return excess free cash flow. So in summary, we had a great second quarter and feel our market positions remain strong. Ann?

最後也非常重要的是，我們正在履行把現金回饋給股東的承諾。我們的資產負債表與現金流都很強健，我們也將持續、並計畫持續把超額自由現金流回饋出去。總結來說，我們第二季表現很棒，並且認為我們的市場地位依然穩固。Ann？

Thank you, Jim, and thank you all for joining us today. A playback on the call is available beginning at 11 AM Eastern today and will run until 5 PM Eastern on Tuesday, August 11. To listen, dial 800-475-6701. The access code is 363576. The audio cast, of course, is available on our website during that time. Operator, that concludes our call. Please 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美東時間今天上午 11 點開始提供，並持續到 8 月 11 日（週二）美東時間下午 5 點。收聽請撥打 800-475-6701。存取碼為 363576。當然，在此期間也可於我們的網站收聽網路音訊直播回放。接線生，我們的電話會議到此結束。請斷開所有線路。