By Franklin Paul

The results proved that Corning, like many other large manufacturers, is struggling to find balance and plan for the future in a decaying economic environment where both consumers and corporations are curtailing spending.

"The economic conditions are making it difficult for us and many other companies to forecast with any degree of certainty," Chief Financial Officer Jim Flaws said on a conference call. "While the markets take time to recover, we will make ourselves leaner and more cost-effective while investing to expand our technology leadership."

Corning, whose glass is used for flat-panel displays and fiber-optic cables, said fourth-quarter net income fell to $249 million, or 16 cents a share, from $768 million, or 49 cents a share, a year earlier.

Excluding special items, profit was 13 cents a share, down 70 percent from a year ago. Analysts were looking for profit of 19 cents per share, according to Reuters Estimates. One-time items included restructuring charges and a gain from an asbestos settlement.

As the economy has declined, demand from manufacturers for liquid crystal displays in flat-panel televisions and computers has decreased. The slowdown has been particularly harsh among companies that assemble TVs and among Corning's customers in Taiwan.

As a result, revenue for Corning, named for Corning, New York, where the company began as a glass maker more than 150 years ago, fell 30 percent to $1.1 billion in the fourth quarter.

"We experienced a significant momentum shift in many of our core businesses in the fourth quarter as the recession took hold," Wendell Weeks, chairman and chief executive officer, said in a statement "As a result, we are adjusting our operations to reflect anticipated lower sales in 2009."

SLOWER START IN 2009

The specialty glass maker said it anticipates "a slow start to 2009," with first-quarter volume of display glass down 20 percent to 25 percent.

"Supply chain adjustments compounded by retail sales uncertainty may mean it will take several quarters for Corning's financial model to reach steady state," RBC Capital markets analyst Mark Sue wrote in a note to clients.

He added, however, that shrinking inventories at panel makers and solid consumer demand for TVs may spur a rebound in the second half of 2009.

Corning reiterated that it expects sales, gross margin and net income to be lower in the first quarter compared with the fourth quarter, with first-quarter earnings per share at about break-even, excluding one-time items.

Analysts were looking for first-quarter earnings of 16 cents per share, according to Reuters Estimates.

Corning said it would cut 3,500 jobs, or about 13 percent of its workforce, by the end of the year, and left the door open for more reductions if necessary. It said it is also cutting more than 1,400 temporary workers.

Chief Financial Officer Jim Flaws told Reuters the job cuts would be in North America, Latin America and "heavily in Asia."

The restructuring moves will result in first-quarter charges of $115 million to $165 million. The company hopes to save $150 million to $200 million as a result of the steps.

Corning shares fell early but then recovered and were little changed at around $10 in afternoon trade on the New York Stock exchange. At that level, the shares have fallen 6.5 percent over the past three months, compared with a drop of 10 percent for Corning's top rival, Japan's Asahi Glass Co Ltd.

(Editing by Maureen Bavdek and John Wallace)