Corning Blames Newspaper Report For Huge Stock Drop
Corning Inc. removed the local newspaper’s 10 coin boxes and display racks from its halls and canteens because the company is convinced a story triggered a multibillion-dollar stock drop.
The Leader, a 16,500-circulation daily, reported Tuesday that the company had seriously overestimated demand for optical fiber. “The business Corning Inc. has banked its future on is in a state of emergency,” it declared.
The article, mentioned on CNBC, prompted record trading in Corning shares on the New York Stock Exchange. By day’s end, the stock had tumbled 8.4 percent - a loss of just over $1 billion in value.
The company, which employs 6,500 people in and around this western New York town of 12,000, responded by dumping the boxes in the newspaper’s parking lot.
Chief executive Roger Ackerman complained the article was “filled with inaccuracies, is misleading and is totally irresponsible.”
The next day, however, the stock fell 3.3 percent. Then, on Thursday, Corning confirmed that this year’s sizzling, 30 percent growth in sales of optical fiber and cable had skidded to 20 percent in the third quarter. It lowered its 1997 earnings forecast by 10 to 15 cents.
Wall Street again came down hard and Corning stock plunged another 11 percent to close at $41.938, well below its recent high of $65 set on Aug. 6. It edged up to $42 a share in late trading Friday.
The Leader’s managing editor, Mike Gossie, stood by the article, which cited high-placed, anonymous sources inside the company.
“If we print an inaccurate story, it could affect the stock price for a day,” he said. “But I don’t think any one newspaper story could cause a $3 billion drop in the stock if there wasn’t any substance behind it.”
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