Corning Expects Demand In Fiber and Photonics Markets To Grow At Double-Digit Rates In 2001.

Business Editors

ANAHEIM, Calif.--(BUSINESS WIRE)--March 19, 2001

Fiber Market Growth in 2000 at 50%, 110 Million kms Sold Despite

short-term market softness, company remains confident in its

optical layer strategy and industry's long-term growth potential

Corning Incorporated (NYSE:GLW), a world leading optical layer company, today said that in spite of general economic uncertainty, tight capital and capacity constraints, it remains confident in its optical layer strategy and sees continued growth in the optical communications sector in 2001. The company said it expects the worldwide optical fiber market will grow approximately 20% and the worldwide photonic market will grow by approximately 10% to 30% this year. Corning's comments were made at an analyst and media briefing today at the annual Optical Fiber Communications Conference (OFC 2001) being held in Anaheim, CA.

Earlier today, Corning reduced 2001 financial guidance for the company, stating that it now expects pro forma earnings to be in the range of $1.20 to $1.30 per share and revenues to be in the range of $8.2 billion to $8.5 billion. The company did not change guidance for the first quarter ending March 31, 2001 of $0.28 to $0.31 per share.

2000: A Record for Fiber

Citing growing demands for bandwidth, lower cost networking, and new applications, the worldwide fiber industry grew at exceptional rates in 2000. Alan T. Eusden, senior vice president and general manager of Corning Optical Fiber, said that the total worldwide fiber market exceeded 110 million fiber kilometers last year, representing an overall growth rate of approximately 50% over 1999.

North America, which accounted for 45% of the total worldwide demand during 2000, grew by approximately 50%. Internationally, Western Europe, which represented 25% of the 2000 worldwide demand, was up 45% from 1999; Japan, representing 10% of the world fiber demand, was up 25%; and "Other Asia," which represented 15% of worldwide demand, increased 70%. Rounding out the global review, Latin America and the "Rest of World," which comprised 5%, was up 40%.

Eusden continued by breaking out the 2000 growth rates by market segments: long-haul, metro, access, premises and submarine. Long-haul showed the strongest market growth in 2000 with worldwide demand up approximately 60%. Demand for fiber in the metropolitan market segment experienced worldwide growth of approximately 50%. The access market grew approximately 40%, premises at about 10%, and submarine about 45%.

Demand for Fiber Continuing Worldwide

In presenting Corning's outlook for the worldwide fiber market, Eusden said that while growth rates in 2001 generally will not match those experienced in 2000, "Last year was a phenomenal year for the fiber market, with the highest growth rates since the earliest days of the industry. He added that in 2001 Corning expects fiber demand in North America to grow at almost half the rate of last year, citing a 2000 growth rate in the region of about 50%. Growth in Western Europe is expected to be about half that of last year, which was approximately 45%. In Japan, Corning expects a growth rate slightly lower than the 25% achieved in 2000. Fiber demand in the other Asian countries is expected to remain strong in 2001, with a growth rate of about half of the 70% the region experienced in 2000. The Latin America and Rest of World regions are also expected to sustain fiber demand at a rate similar to last's year's 40%.

Corning expects the long haul segment's worldwide growth rate in 2001 to be approximately 10%, down from the previous year's rate of around 60%. Growth in the metropolitan market is expected to be about half of 2000's rate of about 50%. In the access market worldwide fiber demand in 2001 is expected to be slightly less than last year's rate of approximately 40%. And in the premises market growth should be slightly higher than last year's rate of around 10%. Rounding out the market segments, in 2001 submarine is expected to grow at a rate similar to that of last year's 45%.

Photonics Market To Be $30 Billion By 2004

Dr. Gerald J. Fine, executive vice president and general manager of Corning Photonic Technologies, presented Corning's overview of the worldwide market for photonic components. Fine stated that Corning expects the worldwide photonics market to grow by approximately 10% to 30% in 2001. "The slower growth rate this year reflects softening economic conditions in a number of important regions globally. While we are not immune to short-term economic fluctuations, we are aimed squarely at a high-growth, long-term market that we believe is very robust," he said. "We have a growing portfolio of leading-edge products that are delivering enormous value to our customers and we have many more on the way."

Over the next four years, Corning expects the long-term worldwide photonic components market growth to remain strong. Fine continued his presentation by detailing Corning's short- and long-term projections for the photonics market, "We expect the long-haul market to have a compound annual growth rate (CAGR) of about 50% between 2000 and 2004," he said.

Optical Networking Devices and Integrated Innovation

For the first time at an OFC briefing, Corning also presented an overview of its activities in optical networking devices. Dr. Mark A. Newhouse, vice president and general manager, Optical Network Devices detailed how Corning's expertise in fiber, photonics and optics enables it to deliver lower-cost, higher-value solutions to its customers.

"One of the cardinal principles of our optical layer strategy is integrated innovation, which has enabled Corning to become the worldwide industry leader in optical fiber and cable, optical amplifiers, dispersion compensation products, and reconfigurable add/drop modules," Newhouse said. "This approach enables Corning to exploit synergies in technology and manufacturing to optimize system performance while speeding products to market. This enables our customers to feed their delivery of lower cost next generation systems and services into telecommunications networks."

Newhouse went on to say that Corning Optical Networking Devices is focused on extending the transparent optical frontier, including the elimination of non-value added OEO (optical to electrical back to optical) conversions in communications networks, through the development of reconfigurable optical add/drop modules and optical switch modules.

According to Newhouse, optical transparency introduces cost-efficiency to the network and reconfigurable transparency revolutionizes service delivery. He cited a study by Point East Research that indicates the market for transparent reconfigurable modules is projected to grow four-fold from 2001 to 2004.

Newhouse concluded his presentation by saying, "Corning is uniquely positioned to capture value from the transition to wavelength managed networks. Reconfigurable transparency drastically lowers carrier costs and our broad portfolio of products makes Corning a leading enabler of the reconfigurable transparent network."

Long-term Demand Expected for Bandwidth

In conclusion, Fine pointed out that Corning remains confident in its optical layer strategy and in its ability to capitalize on the numerous opportunities in its markets. "Without minimizing the difficulties posed by the current uncertainty in the economy we remain extremely positive about the long-term demand for bandwidth," Fine said. "On average we expect demand for bandwidth to increase at more than 100% per year for at least the next 10 to 15 years. "We are targeting a robust, high-growth market, and the current softness does not detract from the attractiveness of the long-term picture," he said.

Corning Continuing to Execute Its Optical Layer Strategy

In addition to providing market data Corning presented information on its latest product offerings, many focused on cost-effective, next generation optical communications, including 40 Gb/s transmission and wavelength management. Corning had previously announced that it would have more than a dozen live demonstrations in its booth (#2638) during the conference, showcasing its capabilities in optical technology.

In 2000, Corning continued to hold strong positions with its variety of premium fiber offerings, such as its MetroCor(TM) fiber and LEAF(R) fiber. Since their introduction, MetroCor and LEAF have quickly become the fibers of choice in the market. Corning expects demand for MetroCor to grow dramatically this year, from hundreds of thousands of kilometers in 2000 to millions of kilometers in 2001 and beyond.

At OFC, Corning also is introducing a new fiber to complement its single-mode fiber portfolio, SMF-28e. Due to its superior design, SMF-28e, Corning's low water peak fiber, optimizes performance in the 1383 nm band which has historically been limited by attenuation. In photonics, Corning is now offering a suite of standard and custom distributed Raman amplifiers based on its PureGain 5000R Raman Amplifier product line. These amplifiers include the OptiLock pump from Corning Lasertron, which provides superior power along with tight wavelength locking for long-term stability and reliability. Corning has also extended it leading position in custom EDFA (erbium doped fiber amplifier) designs with 25 new models for 2001.

In micro-optics for the DWDM market, Corning recently has invested in Samsung Corning Micro-Optics and acquired NetOptix. Samsung Corning Micro-Optics has state-of-the-art packaging and manufacturing capabilities that enable high-quality, low cost module production. Corning NetOptix can produce advanced design thin-film filters, in volume, that are used in mux/demux applications.

About Corning

Established in 1851, Corning Incorporated (www.corning.com) creates leading-edge technologies for the fastest-growing markets of the world's economy. Corning manufactures optical fiber, cable and photonic products for the telecommunications industry; and high-performance displays and components for television and other communications-related industries. The company also uses advanced materials to manufacture products for scientific, semiconductor and environmental markets. Corning's revenues in 2000 were $7.1 billion.

Forward-Looking Cautionary Statements

Except for historical information and discussions contained herein, statements included in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statement involve a number of risks, uncertainties and other factors that could cause results to differ materially, as discussed in the company's filing with the Securities and Exchange Commission.

Webcast Information for OFC Briefing

To listen to a live audio webcast of Corning's business briefing at the Optical Fiber Communications Conference from Anaheim, CA., go to http://www.corning.com/investor_relations/ and follow the instructions. The webcast will be archived on the www.corning.com site for 30 days following the call.