Corning, the world's largest maker of glass for liquid crystal display televisions and computers, said sliding prices have caused some oversupply of LCD panels by companies that assemble TV sets, causing some to slow orders.

But Corning held its outlook for panel growth unchanged. Chief Financial Officer Jim Flaws said consumers' robust appetite for flat-panel TVs was likely to help draw down inventories.

"We expect some of the excess inventory has been built in anticipation of tight panel supplies in the second half," Flaws said on a conference call. "If retail strength continues as expected, fueled by lower retail pricing, we expect that excess inventory in the supply chain can be worked off."

Corning's second-quarter net income rose to $3.2 billion, or $2.01 a share, from $489 million, or 30 cents a share, a year earlier.

Excluding special items, Corning's net income was 49 cents a share, matching average expectations of analysts surveyed by Reuters Estimates.

Sales climbed to $1.69 billion, up 19 percent from last year's second-quarter sales of $1.42 billion, but missed analysts' view of $1.72 billion.

Second-quarter sales and net income were negatively affected by the weaker-than-expected yen-to-U.S. dollar exchange rate in the quarter, and a manufacturing interruption that affected shipments to one of its customers. The glitch reduced Corning's second-quarter sales by $24 million and net income by $16 million.

The event was sparked by an employee who did not follow standard operating procedures, the company said, adding that the problem was corrected and output has been "improving steadily."

DISPLAY SALES DIP SEQUENTIALLY

Second-quarter sales for Corning's Display Technologies segment were $809 million, a 33 percent increase over the second quarter 2007, but a 2 percent decline from the first quarter.

Flaws added that the slowing U.S. economy has not hurt sales of LCD televisions, which can cost $1,000 or more. He anticipated the popular 32-inch size flat TV would cost about $400 to $500 during the holiday season.

"This (economic) worry has been with us all year and each month we still see consumers buying televisions," Flaws said. "We cannot guarantee they'll continue to do so, but we are encouraged by the resiliency of television purchases in the United States."

Chief Executive Wendell Weeks said the company's strong results came despite concerns about an economic slowdown.

"We still feel good about being at the high-end of our 25-to-30 percent growth in LCD glass for the year," Weeks said. "So other than what we view as a supply chain correction ... we see the year coming out largely the way in which we thought it would when we started the year, so we don't see any reason to change our strategies."

The glass maker said third-quarter earnings per share would be 48 cents to 51 cents before special items, on sales of $1.65 billion to $1.72 billion.

Analysts were looking for profit of 50 cents a share on revenue of $1.80 billion, according to Reuters Estimates.

The company also said it plans to buy back another $1 billion of its own shares.

Corning shares were down 70 cents, or 3.3 percent, at $20.62 on the New York Stock Exchange.

(Reporting by Franklin Paul, editing by Maureen Bavdek)