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Author: Vetiver Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5349  
Subject: 150 Years of Failures Date: 2/8/2013 10:50 AM
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Prior to the dropping of the A-bomb on Japan, one of the scientists working on the Manhattan Project pleaded with the US War Department not to do it. He noted that the government had someone following him around lest he reveal the tiniest secret about how to build an A-bomb,… But the biggest nuclear secret there was was not how to build an A-bomb but that one can be built. Once you know that, figuring out the details becomes straight forward.

When I graduated with a Materials Science degree from MIT, the sole discussion of glass that was had in 4 years at MIT was a mention by the crystallography professor that, to him, “an uncrystalized material was like an uncooked piece of meat”. All of what I learned about glass was OJT. Dr. Bocko says that some schools are starting to produce graduates that do know a thing or two about glass but for most of Corning’s history, everyone had to learn about glass on the job. A large part of learning about glass is learning what it can or can’t do and the basics of how to do it.

Corning was one of the first corporations to have its own research lab and those inventions have been keeping the company in business, though not always in the way expected. Some decades ago, the lab developed a process for making windshields for cars. It turns out that the process was way too expensive for that and the company completely shut down one of the two facilities it had built. It turns out that the process made glass that was extremely flat, optically flat. This flatness made it ideal for microscope slides. Microscope slides was not the high volume automotive windshield business but it did have a much better price per pound so the one facility was able to keep in business selling glass for microscope slides. Years later, after an ever increasing stream of orders for un-cut sheets of microscope slide glass, the company discovered it was in the LCD substrate business. What was a rather substantial business failure turned into one of the companies greatest success. Similarly, the ion stuffing technique used in gorilla glass was developed long ago with a different objective in mind. When Steve Jobs ( http://flatpaneldisplay.blogspot.com/2011/11/gorilla-glass-s... ) asked for the product for the upcoming iPhone, the company had not made that glass in a while but it was a simple matter to recreate the process.

In the CRT business, when the technology was well past its prime, sets sales were still growing but prices were decidedly on the decline, Corning was able to increase CRT glass prices. In part, this was due to the improvements in the glassmaking process, finer dimensional control that enabled increased automation and lower costs in the CRT tube making process. Another thing that also helped was that the last big innovation in CRT was the introduction of 36% transmission, black glass. This was the first dramatic improvement in CRT visual quality in a while and continued a trend of increasing value added in this display technology embodied in the glass.

In Corning’s current display business, they have a large piece of the LCD substrate business because they already had what the customer needed. They have a large piece of the cover glass business because they already had what the customer needed. There continues to be a lot of development regarding display technology to improve its durability, to improve its viewing characteristics, to lower costs. Some of these efforts may be amenable to things that Corning already has sitting on its shelf: the ability to grow lenses and other structures within the glass, unique surface and printing on glass technology, who knows.

With the passing of RCA’s Sarnoff Labs, industrial research has largely abandoned the model of undirected research, research into interesting properties without a specific product in mind. And, of course, RCA is gone and Sarnoff is no longer intact. Corning is not engaging in undirected research either, but the fact that the lab remains intact means that there is a back shelf of 150 years of inventions ready to go if the right customer just asks the right question.

V.
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Author: Carioca58 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5314 of 5349
Subject: Re: 150 Years of Failures Date: 2/8/2013 10:58 AM
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Great story!

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Author: bellpa One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5315 of 5349
Subject: Re: 150 Years of Failures Date: 2/8/2013 11:06 AM
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Very informative post.

Deserves a double rec!

bellpa

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Author: MajorBob04 Two stars, 250 posts CAPS All Star Mission Olympia 2 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5316 of 5349
Subject: Re: 150 Years of Failures Date: 2/8/2013 11:56 AM
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Very interesting post! This really helps my confidence in my investment in Corning. I don't view Corning as a big growth stock, but I think they will continue to grow modestly through economic boom times and survive in crisis, recessions, or high volatility (now). I think your post reinforces my opinion.

They invest in R&D, and although the investment may not pay off for years, even decades, they still keep the patents and results so that they can use them when the time is right.

Investing in Corning is a very long-term prospect, but also a good way to invest in future products that we can't even dream of. And the investments will survive the lean times.

Thanks again for the background.

MajorBob
Very Long GLW

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Author: abraxas2000 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5317 of 5349
Subject: Re: 150 Years of Failures Date: 2/8/2013 12:46 PM
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Great article, thanks for posting

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Author: Vetiver Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5319 of 5349
Subject: Re: 150 Years of Failures Date: 2/11/2013 11:16 AM
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Of course the downside of the story is that it is sort of an indictment of the company's marketing efforts. The last big business result they got from purely their own initiative was the launch of visions cookware. The guy that drove that, Jim Kaiser, got shuffled out the door... not for that but for a personality conflict.

Formerly, the company had been sited as one of the more outstanding examples of corporate marketing http://boards.fool.com/marketing-myopia-28455806.aspx Now the eagerness for new business waxes and wanes with their immediate situation. When things are going well, the appetite for new business goes away. The result is the company usually has one or, at most two, businesses that are paying all of the bills and the rest of the company is idling as is the new business development.

As I said, when things do turn south for a main business, the company has 150 years of developed technologies sitting on the shelf it can turn to (it can always develop more as well). The key, as is a problem in a lot of companies, is remaining hungry for new business when things are going well. Most of these businesses take a while to develop. The company does not make end products so once they do have something new, the industry and infrastructure that turns it into a a retail product has to develop as well.

V.

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Author: chris293 One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5320 of 5349
Subject: Re: 150 Years of Failures Date: 2/28/2013 3:56 AM
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I like your 150 years of inventions of Corning waiting for the right questions by someone matching the past inventions (failures) to a new product or products. However, this story depends on new ideas not only questions to develope workable products. The model of undirected research made our country stronger, but with a government run as a semi-charity it sounds like everthing should given away for free. That is not good business nor good for the United States.

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